UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Mark One:


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 1-1657

CRANE CO.

(Exact name of registrant as specified in its charter)



Delaware						13-1952290
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


100 First Stamford Place	Stamford	CT	06902
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: 203-363-7300

(Not Applicable)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00	CR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

(check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s classes of common stock, as of April 30, ~~2021~~2022

Common stock, $1.00 Par Value – ~~58,408,535~~56,055,134 shares

Crane Co.

Table of Contents

Form 10-Q

Page

Part I - Financial Information

Item 1.

Financial Statements

Condensed Consolidated Statements of Operations

Page 13

Condensed Consolidated Statements of Comprehensive Income

Page 24

Condensed Consolidated Balance Sheets

Page 35

Condensed Consolidated Statements of Cash Flows

Page 57

Notes to Condensed Consolidated Financial Statements

Page 69

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Page 2931

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Page 3841

Item 4.

Controls and Procedures

Page 3841

Part II - Other Information

Page 3942

Page 3942

Unregistered Sales of Equity Securities and Use of Proceeds

Page 3942

Item 3.

Defaults Upon Senior Securities

Page 3942

Item 4.

Mine Safety Disclosures

Page 3942

Page 3942

Page 4043

Page 4144

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


		Three Months Ended				Three Months Ended
		March 31,				March 31,
(in millions, except per share data)	(in millions, except per share data)	2021		2020			(in millions, except per share data)	2022		2021
Net sales	Net sales	$	833.5	$	797.9		Net sales	$	801.1	$	779.6
Operating costs and expenses:	Operating costs and expenses:						Operating costs and expenses:
Cost of sales	Cost of sales	513.6		510.8			Cost of sales	473.8		470.5
Selling, general and administrative	Selling, general and administrative	186.6		194.5			Selling, general and administrative	193.7		182.2
Acquisition-related and integration charges		0		5.2
Restructuring gain, net		(13.1)		(1.2)

Restructuring (gains) charges, net							Restructuring (gains) charges, net	—		(13.1)
Operating profit	Operating profit	146.4		88.6			Operating profit	133.6		140.0
Other income (expense):	Other income (expense):						Other income (expense):
Interest income	Interest income	0.4		0.4			Interest income	0.3		0.4
Interest expense	Interest expense	(13.6)		(12.5)			Interest expense	(11.1)		(13.6)
Miscellaneous income, net	Miscellaneous income, net	3.9		3.8			Miscellaneous income, net	3.5		3.9
Total other expense	Total other expense	(9.3)		(8.3)			Total other expense	(7.3)		(9.3)
Income before income taxes		137.1		80.3
Income from continuing operations before income taxes							Income from continuing operations before income taxes	126.3		130.7
Provision for income taxes	Provision for income taxes	28.7		17.5			Provision for income taxes	31.6		27.3

Net income from continuing operations attributable to common shareholders							Net income from continuing operations attributable to common shareholders	94.7		103.4
Income from discontinued operations, net of tax (Note 2)							Income from discontinued operations, net of tax (Note 2)	10.3		5.0
Net income attributable to common shareholders	Net income attributable to common shareholders	$	108.4	$	62.8		Net income attributable to common shareholders	$	105.0	$	108.4
Earnings per share:
Basic		$	1.86	$	1.07
Diluted		$	1.84	$	1.05

Earnings per basic share:							Earnings per basic share:
Earnings per basic share from continuing operations							Earnings per basic share from continuing operations	$	1.66	$	1.79
Earnings per basic share from discontinued operations							Earnings per basic share from discontinued operations	0.18		0.10
Earnings per basic share							Earnings per basic share	$	1.84	$	1.89

Earnings per diluted share:							Earnings per diluted share:
Earnings per diluted share from continuing operations							Earnings per diluted share from continuing operations	$	1.64	$	1.75
Earnings per diluted share from discontinued operations							Earnings per diluted share from discontinued operations	0.17		0.09
Earnings per diluted share							Earnings per diluted share	$	1.81	$	1.84

Average shares outstanding:	Average shares outstanding:						Average shares outstanding:
Basic	Basic	58.2		58.8			Basic	57.1		58.2
Diluted	Diluted	58.9		59.6			Diluted	57.9		58.9

Dividends per share	Dividends per share	$	0.43	$	0.43		Dividends per share	$	0.47	$	0.43

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


		Three Months Ended				Three Months Ended
		March 31,				March 31,
(in millions)	(in millions)	2021		2020			(in millions)	2022		2021
Net income before allocation to noncontrolling interests	Net income before allocation to noncontrolling interests	$	108.4	$	62.8		Net income before allocation to noncontrolling interests	$	105.0	$	108.4
Components of other comprehensive income (loss), net of tax	Components of other comprehensive income (loss), net of tax						Components of other comprehensive income (loss), net of tax
Currency translation adjustment	Currency translation adjustment	(34.9)		(45.2)			Currency translation adjustment	(21.6)		(34.9)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	Changes in pension and postretirement plan assets and benefit obligation, net of tax	4.9		3.6			Changes in pension and postretirement plan assets and benefit obligation, net of tax	3.3		4.9
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	(30.0)		(41.6)			Other comprehensive loss, net of tax	(18.3)		(30.0)
Comprehensive income before allocation to noncontrolling interests	Comprehensive income before allocation to noncontrolling interests	78.4		21.2			Comprehensive income before allocation to noncontrolling interests	86.7		78.4
Less: Noncontrolling interests in comprehensive income	Less: Noncontrolling interests in comprehensive income	0.8		(0.3)			Less: Noncontrolling interests in comprehensive income	0.1		0.8
Comprehensive income attributable to common shareholders	Comprehensive income attributable to common shareholders	$	77.6	$	21.5		Comprehensive income attributable to common shareholders	$	86.6	$	77.6

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions)	(in millions)	March 31, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	578.4	$	551.0	Cash and cash equivalents	$	307.2	$	478.6
Accounts receivable, net		483.4		432.7
Accounts receivable, net of allowance for doubtful accounts of $9.3 as of March 31, 2022 and $10.4 as of December 31, 2021						Accounts receivable, net of allowance for doubtful accounts of $9.3 as of March 31, 2022 and $10.4 as of December 31, 2021	510.9		472.4
Current insurance receivable - asbestos	Current insurance receivable - asbestos	14.4		14.4		Current insurance receivable - asbestos	13.7		13.7
Inventories, net:	Inventories, net:					Inventories, net:
Finished goods	Finished goods	139.0		130.5		Finished goods	156.1		143.8
Finished parts and subassemblies	Finished parts and subassemblies	50.4		54.5		Finished parts and subassemblies	68.4		59.5
Work in process	Work in process	45.6		45.2		Work in process	33.3		36.9
Raw materials	Raw materials	201.9		208.0		Raw materials	213.5		200.7
Inventories, net	Inventories, net	436.9		438.2		Inventories, net	471.3		440.9
Other current assets	Other current assets	129.3		137.4		Other current assets	115.1		118.1
Current assets held for sale						Current assets held for sale	234.1		220.5
Total current assets	Total current assets	1,642.4		1,573.7		Total current assets	1,652.3		1,744.2
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
Cost	Cost	1,280.8		1,295.8		Cost	1,176.2		1,179.9
Less: accumulated depreciation	Less: accumulated depreciation	706.3		695.4		Less: accumulated depreciation	660.0		652.6
Property, plant and equipment, net	Property, plant and equipment, net	574.5		600.4		Property, plant and equipment, net	516.2		527.3
Long-term insurance receivable - asbestos	Long-term insurance receivable - asbestos	70.0		72.5		Long-term insurance receivable - asbestos	55.8		60.0
Long-term deferred tax assets	Long-term deferred tax assets	6.4		14.9		Long-term deferred tax assets	19.4		17.7
Other assets	Other assets	195.1		198.1		Other assets	254.7		259.0
Intangible assets, net	Intangible assets, net	503.0		520.3		Intangible assets, net	452.1		465.9
Goodwill	Goodwill	1,595.1		1,609.0		Goodwill	1,402.7		1,412.5

Total assets	Total assets	$	4,586.5	$	4,588.9	Total assets	$	4,353.2	$	4,486.6

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions, except per share and per share data)		March 31, 2021		December 31, 2020
(in millions, except per share and share data)						(in millions, except per share and share data)	March 31, 2022		December 31, 2021
Liabilities and equity	Liabilities and equity					Liabilities and equity
Current liabilities:	Current liabilities:					Current liabilities:
Short-term borrowings	Short-term borrowings	$	346.9	$	375.7	Short-term borrowings	$	104.0	$	—
Accounts payable	Accounts payable	233.6		218.4		Accounts payable	233.9		246.7
Current asbestos liability	Current asbestos liability	66.5		66.5		Current asbestos liability	62.3		62.3
Accrued liabilities	Accrued liabilities	374.7		395.9		Accrued liabilities	333.1		430.7
U.S. and foreign taxes on income	U.S. and foreign taxes on income	12.9		0.1		U.S. and foreign taxes on income	23.0		10.6
Current liabilities held for sale						Current liabilities held for sale	41.5		44.9
Total current liabilities	Total current liabilities	1,034.6		1,056.6		Total current liabilities	797.8		795.2
Long-term debt	Long-term debt	843.2		842.9		Long-term debt	842.7		842.4
Accrued pension and postretirement benefits	Accrued pension and postretirement benefits	305.3		329.7		Accrued pension and postretirement benefits	223.6		231.9
Long-term deferred tax liability	Long-term deferred tax liability	49.1		53.6		Long-term deferred tax liability	69.2		71.1
Long-term asbestos liability	Long-term asbestos liability	590.3		603.6		Long-term asbestos liability	538.1		549.8
Other liabilities	Other liabilities	166.0		171.4		Other liabilities	155.6		161.1

Total liabilities	Total liabilities	2,988.5		3,057.8		Total liabilities	2,627.0		2,651.5
Commitments and contingencies (Note 11)	Commitments and contingencies (Note 11)	0				Commitments and contingencies (Note 11)	0
Equity:	Equity:					Equity:
Preferred shares, par value $0.01; 5,000,000 shares authorized	Preferred shares, par value $0.01; 5,000,000 shares authorized	0		0		Preferred shares, par value $0.01; 5,000,000 shares authorized	—		—
Common shares, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued	Common shares, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued	72.4		72.4		Common shares, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued	72.4		72.4
Capital surplus	Capital surplus	334.7		330.7		Capital surplus	364.7		363.9
Retained earnings	Retained earnings	2,276.2		2,192.8		Retained earnings	2,605.9		2,527.3
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(497.2)		(466.4)		Accumulated other comprehensive loss	(458.6)		(440.2)
Treasury stock	Treasury stock	(591.1)		(600.6)		Treasury stock	(861.1)		(691.1)
Total shareholders’ equity	Total shareholders’ equity	1,595.0		1,528.9		Total shareholders’ equity	1,723.3		1,832.3
Noncontrolling interests	Noncontrolling interests	3.0		2.2		Noncontrolling interests	2.9		2.8
Total equity	Total equity	1,598.0		1,531.1		Total equity	1,726.2		1,835.1
Total liabilities and equity	Total liabilities and equity	$	4,586.5	$	4,588.9	Total liabilities and equity	$	4,353.2	$	4,486.6

Share data:	Share data:					Share data:
Common shares issued	Common shares issued	72,426,139		72,426,139		Common shares issued	72,426,139		72,426,139
Less: Common shares held in treasury	Less: Common shares held in treasury	14,048,660		14,298,191		Less: Common shares held in treasury	16,120,215		14,590,274
Common shares outstanding	Common shares outstanding	58,377,479		58,127,948		Common shares outstanding	56,305,924		57,835,865

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended
March 31,
(in millions) 2021 2020
Operating activities:
Net income attributable to common shareholders $ 108.4 $ 62.8
Gain on sale of property (12.7) 0
Depreciation and amortization 31.6 29.9
Stock-based compensation expense 6.3 5.8
Defined benefit plans and postretirement credit (1.7) (1.8)
Deferred income taxes 0.3 6.1
Cash used for operating working capital (54.8) (123.7)
Defined benefit plans and postretirement contributions (15.8) (1.5)
Environmental payments, net of reimbursements (1.5) (2.7)
Asbestos related payments, net of insurance recoveries (10.8) (11.7)
Other 0.9 1.3
Total provided by (used for) operating activities 50.2 (35.5)
Investing activities:
Payment for acquisition - net of cash acquired 0 (172.0)
Proceeds from disposition of capital assets 14.5 2.4
Capital expenditures (4.9) (7.8)
Purchase of marketable securities (10.0) 0
Proceeds from sale of marketable securities 30.0 0
Total provided by (used for) investing activities 29.6 (177.4)
Financing activities:
Dividends paid (25.0) (25.5)
Reacquisition of shares on open market 0 (70.0)
Stock options exercised - net of shares reacquired 7.2 0.1
Repayments of commercial paper with maturities greater than 90 days (27.1) 0
Proceeds from issuance of commercial paper with maturities greater than 90 days 0 170.0
Net proceeds from issuance of commercial paper with maturities of 90 days or less 0 14.5
Net borrowings under revolving credit facility 0 45.2
Total (used for) provided by financing activities (44.9) 134.3
Effect of exchange rates on cash and cash equivalents (7.5) (12.5)
Increase (decrease) in cash and cash equivalents 27.4 (91.1)
Cash and cash equivalents at beginning of period 551.0 393.9
Cash and cash equivalents at end of period $ 578.4 $ 302.8
Detail of cash used for operating working capital:
Accounts receivable $ (55.1) $ 12.0
Inventories (1.6) (31.1)
Other current assets (19.0) (17.1)
Accounts payable 16.9 (61.1)
Accrued liabilities (18.7) (26.5)
U.S. and foreign taxes on income 22.7 0.1
Total $ (54.8) $ (123.7)
Supplemental disclosure of cash flow information:
Interest paid $ 9.9 $ 8.0
Income taxes paid $ 5.7 $ 11.3


	Three Months Ended
	March 31,
(in millions)	2022		2021
Operating activities from continuing operations:
Net income from continuing operations attributable to common shareholders	$	94.7	$	103.4
Gain on sale of property	—		(12.8)
Depreciation and amortization	28.6		30.6
Stock-based compensation expense	5.9		6.2
Defined benefit plans and postretirement credit	(2.7)		(1.7)
Deferred income taxes	(0.9)		0.3
Cash used for operating working capital	(167.1)		(51.5)
Defined benefit plans and postretirement contributions	(2.8)		(15.8)
Environmental payments, net of reimbursements	(1.3)		(1.5)
Asbestos related payments, net of insurance recoveries	(7.5)		(10.8)
Other	3.8		1.2
Total (used for) provided by operating activities from continuing operations	(49.3)		47.6
Investing activities from continuing operations:

Proceeds from disposition of capital assets	—		14.5
Capital expenditures	(12.5)		(4.7)
Purchase of marketable securities	—		(10.0)
Proceeds from sale of marketable securities	—		30.0
Total (used for) provided by investing activities from continuing operations	(12.5)		29.8
Financing activities from continuing operations:
Dividends paid	(26.7)		(25.0)
Reacquisition of shares on open market	(175.8)		—
Stock options exercised, net of shares reacquired	0.7		7.3


Repayments of commercial paper with maturities greater than 90 days	—		(27.1)
Net borrowings from issuance of commercial paper with maturities of 90 days or less	104.0		—




Total used for financing activities from continuing operations	(97.8)		(44.8)
Discontinued operations:
Total (used for) provided by operating activities	(6.2)		2.6
Total used for investing activities	(0.5)		(0.3)
(Decrease) increase in cash and cash equivalents from discontinued operations	(6.7)		2.3
Effect of exchange rates on cash and cash equivalents	(5.1)		(7.5)
(Decrease) increase in cash and cash equivalents	(171.4)		27.4
Cash and cash equivalents at beginning of period	478.6		551.0
Cash and cash equivalents at end of period	$	307.2	$	578.4

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended
	March 31,
(in millions)	2022		2021
Detail of cash used for operating working capital from continuing operations:
Accounts receivable	$	(41.9)	$	(48.9)
Inventories	(32.5)		(1.7)
Other current assets	(5.6)		(18.5)
Accounts payable	(11.2)		13.3
Accrued liabilities	(94.7)		(18.4)
U.S. and foreign taxes on income	18.8		22.7
Total	$	(167.1)	$	(51.5)

Supplemental disclosure of cash flow information:
Interest paid	$	7.4	$	9.9
Income taxes paid	$	13.7	$	5.7

See Notes to Condensed Consolidated Financial ~~Statements~~.Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Due to rounding, numbers presented throughout this report may not add up precisely to totals we provide, and percentages may not precisely reflect the absolute figures.

Certain amounts in the prior periods’ condensed consolidated financial statements have been reclassified to conform to the current period presentation.

Pending Separation

On March 30, 2022, Crane Co. announced that its Board of Directors unanimously approved a plan to pursue a separation into two independent, publicly-traded companies (the “Separation”). The Separation is expected to occur through a tax-free distribution and is expected to be completed within approximately 12 months, subject to the satisfaction of customary conditions and final approval by Crane Co.’s Board of Directors.

Discontinued Operations

On May 16, 2021, we entered into an agreement to sell the Engineered Materials segment to Grupo Verzatec S.A. de C.V. for $360 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals. The historical results of Engineered Materials are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Throughout this Quarterly Report on Form 10-Q, unless otherwise indicated, amounts and activity are presented on a continuing operations basis. Please see Note 2, “Discontinued Operations” for additional details.

Recent Accounting Pronouncements - Adopted

Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) issued amended guidance to simplify the accounting for income taxes. The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Certain amendments are to be applied prospectively, while other amendments are to be applied retrospectively to all periods presented. We have adopted this standard effective January 1, 2021. The adoption of this new standard did not impact our consolidated financial statements.

~~Disclosure Requirements~~

Note 2 - Discontinued Operations

A business is classified as held for ~~Defined Benefit Plans~~

~~In August 2018,~~sale when management having the ~~FASB issued amended guidance~~authority to ~~add, remove, and clarify disclosure requirements related~~approve the action commits to ~~defined benefit pension and other postretirement plans. The amended guidance removes~~a plan to sell the ~~requirements~~business, the sale is probable to ~~disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over~~occur during the next ~~fiscal year;~~12 months at a price that is reasonable in relation to its current fair value and certain other criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. When the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized and ~~timing~~updated each reporting period as appropriate.

Executing on our strategy to focus our growth investments on our 3 remaining segments, on May 16, 2021, we entered into an agreement to sell our Engineered Materials segment to Grupo Verzatec S.A. de C.V. for $360 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals. In the second quarter of ~~plan~~2021, the assets ~~expected to be returned to~~and liabilities of the ~~entity;~~segment were classified as held for sale, and the ~~effects of a one-percentage point~~segment’s results were presented as discontinued operations. This change ~~in assumed health care cost trend r~~ates. The amended guidance requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This guidance is effective for fiscal years ending after December 15, 2020. Effective December 31, 2020, we adopted the amended guidance andwas applied ~~the disclosure requirements~~ on a retrospective ~~basis~~basis. On March 17, 2022, the Department of Justice (DOJ) filed a complaint to ~~all periods presented. This amended guidance did not have a material effect on our disclosures.~~

~~Measurement of Credit Losses on Financial Instruments~~

~~In June 2016,~~enjoin the ~~FASB issued amended guidance that changes~~sale transaction. The parties are responding to the ~~impairment model for most financial assets~~complaint and certain other instruments. For trade receivables, contract assets and other receivables, held-to-maturity debt securities, loans and other instruments, entities are required to use a current expected credit loss (“CECL”) model that will immediately recognize an estimate of credit losses that are expected to occur overengaging with the ~~life of the financial instruments that are~~DOJ in the ~~scope of this update, including trade receivables. For available-for-sale debt securities with unrealized losses, entities will measure credit losses~~normal course to address the DOJ’s antitrust concerns regarding a minor overlap in a manner similar to current practice, except that the losses will be recognized as an allowance. The CECL model is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect collectability.

~~On January 1, 2020, we adopted the new CECL standard and developed an expected impairment model based on our historical loss experience.~~narrow range of material used in certain commercial building applications. We believe that ~~our previous methodology~~the sale is probable of closing and, as such, continue to ~~calculate credit losses is generally consistent with~~present the ~~new expected credit loss model and did not result in a material adjustment upon adoption. The allowance for doubtful accounts was $9.3 million and $10.9 million~~segment’s results as discontinued operations as of March 31, ~~2021 and December 31, 2020, respectively.~~

2022.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Note 2 - Acquisitions~~Financial results from discontinued operations:

~~Acquisitions are accounted for in accordance with ASC Topic 805, “Business Combinations” (“ASC 805”). Accordingly, we make an initial allocation~~


	Three Months Ended
	March 31,
(in millions)	2022		2021
Net sales	$	70.4	$	53.9
Cost of sales	52.4		43.1
Selling, general and administrative	4.6		4.4

Income from discontinued operations	$	13.4	$	6.4
Income tax provision	3.1		1.4
Income from discontinued operations, net of tax	$	10.3	$	5.0

Major classes of the purchase price at the date of acquisition based upon our understanding of the fair value of the acquired assets and assumed liabilities. We obtain this information during due diligence and through other sources. In the months after closing, as we obtain additional information about these assets and liabilities including through tangible and intangible asset appraisals, we are able to refine estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment to the purchase price allocation. We will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

In order to allocate the consideration transferred for our acquisitions, the fair values of all identifiable assets and liabilities must be established. For accounting and financial reporting purposes, fair value is defined under ASC Topic 820, “Fair Value Measurement and Disclosure” as the price that would be received upon sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are assumed to be ~~buyers and sellers~~transferred in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants. Use of different estimates and judgments could yield different results.transaction:

~~Instrumentation & Sampling Business Acquisition~~

On January 31, 2020, we completed the acquisition of CIRCOR International, Inc.’s Instrumentation & Sampling Business (“I&S”) for $172.3 million on a cash-free and debt-free basis, subject to a later adjustment reflecting I&S' net working capital, cash, the assumption of certain debt-like items, and I&S' transaction expenses. We funded the acquisition through short-term borrowings consisting of $100 million of commercial paper and $67 million from our revolving credit facility, and cash on hand. In August 2020, we received $3.1 million related to the final working capital adjustment which resulted in net cash paid of $169.2 million.


(in millions)	March 31, 2022		December 31, 2021
Assets:
Accounts receivable, net	$	20.7	$	10.6
Inventories, net	10.9		8.2
Other current assets	0.8		0.6
Current assets held for sale (a)	32.4		19.4

Property, plant and equipment, net	28.8		28.3
Other assets	0.4		0.3
Intangible assets, net	1.2		1.2
Goodwill	171.3		171.3
Long-term assets held for sale (a)	201.7		201.1
Assets held for sale	$	234.1	$	220.5

Liabilities:
Accounts payable	$	28.9	$	27.0
Accrued liabilities	6.7		12.0
Current liabilities held for sale (a)	35.6		39.0

Long-term deferred tax liability	5.8		5.8
Other liabilities	0.1		0.1
Long-term liabilities held for sale (a)	5.9		5.9
Liabilities held for sale	$	41.5	$	44.9
(a) We reasonably expect to close on this transaction within one year and therefore have presented the assets and liabilities as current as of March 31, 2022.

I&S designs, engineers and manufactures a broad range of critical fluid control instrumentation and sampling solutions used in severe service environments which complements our existing portfolio of chemical, refining, petrochemical and upstream oil and gas applications. I&S has been integrated into the Fluid Handling segment. The amount allocated to goodwill reflects the expected sales synergies, manufacturing efficiency and procurement savings. Goodwill from this acquisition is not deductible for tax purposes.

~~Allocation of Consideration Transferred to Net Assets Acquired~~

The following amounts represent the determination of the fair value of identifiable assets acquired and liabilities assumed from our acquisition of I&S. The fair value of certain assets and liabilities has been completed as required by ASC 805.


~~Net assets acquired~~ ~~(in millions)~~
~~Total current assets~~	$	~~21.0~~
~~Property, plant and equipment~~	~~11.0~~
~~Other assets~~	~~6.0~~
~~Intangible assets~~	~~52.5~~
~~Goodwill~~	~~106.0~~
~~Total assets acquired~~	$	~~196.5~~

~~Total current liabilities~~	$	~~8.1~~
~~Other liabilities~~	~~19.2~~
~~Total assumed liabilities~~	$	~~27.3~~
~~Net assets acquired~~	$	~~169.2~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The amounts allocated to acquired intangible assets, and their associated weighted-average useful lives which were determined based on the period in which the assets are expected to contribute directly or indirectly to our future cash flows, consist of the following:

Intangible Assets (dollars in millions) Intangible Fair Value Weighted Average Life
Trademarks/trade names $ 2.6 13
Customer relationships 49.0 14
Backlog 0.9 1
Total acquired intangible assets $ 52.5

The fair values of the trademark and trade name intangible assets were determined by using an income approach, specifically the relief-from-royalty approach, which is a commonly accepted valuation approach. This approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this asset. Therefore, a portion of I&S’ earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to our ownership. The trade names are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 13 years.

The fair values of the customer relationships and backlog intangible assets were determined by using an income approach which is a commonly accepted valuation approach. Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows. These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured. Both the amount and the duration of the cash flows are considered from a market participant perspective. Our estimates of market participant net cash flows considered historical and projected pricing, operational performance including market participant synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors. Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are expected to decline over time. The attrition-adjusted future cash flows are then discounted to present value using an appropriate discount rate. The customer relationship asset is being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 14 years.

~~Supplemental Pro Forma Data~~

I&S’ results of operations have been included in our financial statements for the period subsequent to the completion of the acquisition on January 31, 2020. Consolidated pro forma revenue and net income attributable to common shareholders has not been presented since the impact is not material to our financial results.

~~Acquisition-Related Costs~~

Acquisition-related costs are expensed as incurred. For the three months ended March 31, 2020, we recorded $5.2 million of integration and transaction costs in our Condensed Consolidated Statements of Operations.

Note 3 - Segment Results

Our segments are reported on the same basis used internally for evaluating performance and for allocating resources. We have 4 reportable segments: ~~Fluid Handling,~~Aerospace & Electronics, Process Flow Technologies, Payment & Merchandising Technologies ~~Aerospace & Electronics~~ and Engineered Materials. Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, insurance receivables, certain property, plant and equipment, and certain other assets. Corporate consists of corporate office expenses including compensation and benefits for corporate employees, occupancy, depreciation, and other administrative costs.

A brief description of each of our segments are as follows:

~~Fluid Handling~~Aerospace & Electronics

The ~~Fluid Handling~~Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace, and the military aerospace, defense and space markets. Products include a wide range of custom designed, highly engineered products used in landing systems, sensing and utility systems, fluid management, seat actuation, power and microelectronic applications, and microwave systems.

Process Flow Technologies

The Process Flow Technologies segment is a provider of highly engineered fluid handling equipment for mission critical ~~performance~~ applications that require high reliability. The segment is comprised of Process Valves and Related Products, Commercial Valves, and Pumps and Systems. Process Valves and Related Products ~~include~~manufactures on/off isolation valves, instrumentation and controls, and related products for critical and demanding applications primarily in the chemical ~~oil & gas, power,~~ and petrochemical, general industrial, energy- related and pharmaceutical end markets globally. Commercial Valves ~~includes~~is engaged primarily in the manufacturing ~~and distribution~~ of valves and related products for the non-residential construction, general industrial, and ~~to a lesser extent,~~ municipal ~~markets.~~markets, and the distribution of pipe, valves and fittings (PVF) for the non-residential construction market. Pumps and Systems ~~include~~manufactures pumps and related products ~~primarily~~ for water and wastewater applications in the industrial, municipal, commercial and military markets.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

On April 8, 2022, the Company entered into an agreement to sell Crane Supply for CAD 380 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2022.

Payment & Merchandising Technologies

The Payment & Merchandising Technologies segment consists of Crane Payment Innovations (“CPI”) and Crane Currency. CPI provides high technology payment acceptance and dispensing products to original equipment manufacturers, and for certain vertical markets, it also provides currency handling and processing systems, complete cash and cashless payment and merchandising solutions, equipment service solutions, and fully connected managed service solutions. Crane Currency is a supplier of banknotes and highly engineered banknote security ~~features.~~

~~Aerospace & Electronics~~

~~The Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily~~features as well as a provider of security features for ~~the commercial aerospace and military aerospace and defense markets. Products include~~product authentication. A pioneer in advanced micro-optics technology, Crane Currency provides a wide range of ~~custom~~engaging visual effects in features that increase the level of security and public trust in banknotes and for the product brand authentication market. Crane Currency offers uniquely designed ~~highly engineered products used in landing systems, sensing~~banknotes, substrate (paper) and ~~utility systems, fluid management, seat actuation, power and microelectronic applications, and microwave systems.~~printing capabilities for over 50 central banks around the world.

Engineered Materials

The Engineered Materials segment manufactures fiberglass-reinforced plastic panels and coils, primarily for use in the manufacturing of recreational vehicles ~~truck bodies~~("RVs"), and ~~trailers (Transportation), with additional applications~~ in commercial and industrial buildings ~~(Building Products).~~

Three Months Ended
March 31,
(in millions) 2021 2020
Net sales:
Fluid Handling $ 288.0 $ 256.7
Payment & Merchandising Technologies 337.5 297.4
Aerospace & Electronics 154.1 192.9
Engineered Materials 53.9 50.9
Total 833.5 797.9
Operating profit:
Fluid Handling 49.9 28.0
Payment & Merchandising Technologies 85.9 26.4
Aerospace & Electronics 26.0 43.8
Engineered Materials 6.4 6.9
Corporate (21.8) (16.5)
Total 146.4 88.6
Interest income 0.4 0.4
Interest expense (13.6) (12.5)
Miscellaneous income, net 3.9 3.8
Income before income taxes $ 137.1 $ 80.3

~~For~~applications, with some additional applications including trailers and other transportation-related products. Engineered Materials sells the ~~three months ended March 31,~~majority of its products directly to RV, trailer, and truck manufacturers, and it uses distributors and retailers to serve the commercial and industrial construction markets. In the second quarter of 2021, ~~operating profit includes~~the assets and liabilities of the Engineered Materials segment were reclassified as held for sale and results are presented as discontinued operations and, therefore, not included in the tables below. This change was applied on a net restructuring gain of $13.1 million. For the three months ended March 31, 2020, operating profit includes acquisition-related and integration charges $5.2 million and a net restructuring gain of $1.2 million. Seeretrospective basis. Please see Note 2, ~~“Acquisitions” and Note 14, “Restructuring”~~“Discontinued Operations” for ~~further discussion.~~

(in millions) March 31, 2021 December 31, 2020
Assets:
Fluid Handling $ 1,135.5 $ 1,106.1
Payment & Merchandising Technologies 2,146.9 2,215.3
Aerospace & Electronics 612.4 593.9
Engineered Materials 223.2 217.3
Corporate 468.5 456.3
Total $ 4,586.5 $ 4,588.9
additional details.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Three Months Ended
	March 31,
(in millions)	2022		2021
Net sales:
Aerospace & Electronics	$	157.2	$	154.1
Process Flow Technologies	311.3		288.0
Payment & Merchandising Technologies	332.6		337.5
Total	$	801.1	$	779.6

Operating profit:
Aerospace & Electronics	$	28.1	$	26.0
Process Flow Technologies	49.0		49.9
Payment & Merchandising Technologies	84.2		85.9
Corporate	(27.7)		(21.8)
Total	$	133.6	$	140.0
Interest income	0.3		0.4
Interest expense	(11.1)		(13.6)
Miscellaneous income, net	3.5		3.9
Income from continuing operations before income taxes	$	126.3	$	130.7

(in millions) March 31, 2021 December 31, 2020
Goodwill:
Fluid Handling $ 355.0 $ 360.0
Payment & Merchandising Technologies 866.3 875.2
Aerospace & Electronics 202.5 202.5
Engineered Materials 171.3 171.3
Total $ 1,595.1 $ 1,609.0


(in millions)	March 31, 2022		December 31, 2021
Assets:
Aerospace & Electronics	$	625.6	$	604.7
Process Flow Technologies	1,282.5		1,240.4
Payment & Merchandising Technologies	2,057.6		2,096.5
Corporate	153.4		324.5
Assets held for sale	234.1		220.5
Total	$	4,353.2	$	4,486.6


(in millions)	March 31, 2022		December 31, 2021
Goodwill:
Aerospace & Electronics	$	202.5	$	202.5
Process Flow Technologies	346.1		349.4
Payment & Merchandising Technologies	854.1		860.6
Total	$	1,402.7	$	1,412.5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Revenue

Disaggregation of Revenues

The following table presents net sales disaggregated by product line for each segment:

Three Months Ended
March 31,
(in millions) 2021 2020
Fluid Handling
Process Valves and Related Products $ 174.5 $ 157.2
Commercial Valves 89.2 75.9
Pumps and Systems 24.3 23.6
Total Fluid Handling $ 288.0 $ 256.7
Payment & Merchandising Technologies
Payment Acceptance and Dispensing Products 1
$ 185.0 $ 203.2
Banknotes and Security Products 152.5 94.2
Total Payment & Merchandising Technologies $ 337.5 $ 297.4
Aerospace & Electronics
Commercial Original Equipment $ 54.7 $ 80.6
Military and Other Original Equipment 62.8 60.4
Commercial Aftermarket Products 19.5 33.9
Military Aftermarket Products 17.1 18.0
Total Aerospace & Electronics $ 154.1 $ 192.9
Engineered Materials
FRP - Recreational Vehicles $ 24.3 $ 18.8
FRP - Building Products 21.8 24.9
FRP - Transportation 7.8 7.2
Total Engineered Materials $ 53.9 $ 50.9
Net sales $ 833.5 $ 797.9

1 As a result of the third quarter 2020 internal merger of the CMS business into the vending vertical of the CPI business, Payment Acceptance and Dispensing Products now includes Merchandising Equipment. The prior period has been reclassified to conform to the current period presentation.


	Three Months Ended
	March 31,
(in millions)	2022		2021
Aerospace & Electronics
Commercial Original Equipment	$	58.7	$	54.7
Military and Other Original Equipment	57.4		62.8
Commercial Aftermarket Products	28.6		19.5
Military Aftermarket Products	12.5		17.1
Total Aerospace & Electronics	$	157.2	$	154.1

Process Flow Technologies
Process Valves and Related Products	$	182.9	$	174.5
Commercial Valves	98.2		89.2
Pumps and Systems	30.2		24.3
Total Process Flow Technologies	$	311.3	$	288.0

Payment & Merchandising Technologies
Payment Acceptance and Dispensing Products	$	211.0	$	185.0
Banknotes and Security Products	121.6		152.5
Total Payment & Merchandising Technologies	$	332.6	$	337.5

Net sales	$	801.1	$	779.6

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents the transaction price of firm orders which have not yet been fulfilled, which we also refer to as total backlog. As of March 31, ~~2021,~~2022, total backlog was ~~$1,161.0~~$1,309.8 million. We expect to recognize approximately ~~87%~~85% of our remaining performance obligations as revenue in ~~2021,~~2022, an additional ~~10%~~13% in ~~2022~~2023 and the balance thereafter.

Contract Assets and Contract Liabilities

Contract assets represent unbilled amounts that typically arise from contracts for customized products or contracts for products sold directly to the U.S. government or indirectly to the U.S. government through subcontracts, where revenue recognized using the cost-to-cost method exceeds the amount billed to the customer. Contract assets are assessed for impairment and recorded at their net realizable value. Contract liabilities represent advance payments from customers. Revenue related to contract liabilities is recognized when control is transferred to the customer. We report contract assets, which are included within “Other current assets” in our Condensed Consolidated Balance Sheets, and contract liabilities, which are included within “Accrued liabilities” on our Condensed Consolidated Balance Sheets, on a contract-by-contract net basis at the end of each reporting period. Net contract assets and contract liabilities consisted of the following:


(in millions)	March 31, 2022		December 31, 2021
Contract assets	$	78.0	$	73.0
Contract liabilities	$	96.5	$	101.1

We recognized revenue of $32.3 million during the three-month period ended March 31, 2022 related to contract liabilities as of December 31, 2021.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions) March 31, 2021 December 31, 2020
Contract assets $ 80.2 $ 66.7
Contract liabilities $ 95.5 $ 103.0

~~We recognized revenue of $33.3 million during the three-month period ended March 31, 2021 related to contract liabilities as of December 31, 2020.~~

Note 5 - Earnings Per Share

Our basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period. Potentially dilutive securities include outstanding stock options, restricted share units, deferred stock units and performance-based restricted share units. The effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method. Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the period.


		Three Months Ended					Three Months Ended
		March 31,					March 31,
(in millions, except per share data)	(in millions, except per share data)	2021		2020		(in millions, except per share data)	2022		2021
Net income from continuing operations attributable to common shareholders						Net income from continuing operations attributable to common shareholders	$	94.7	$	103.4
Income from discontinued operations, net of tax (Note 2)						Income from discontinued operations, net of tax (Note 2)	10.3		5.0
Net income attributable to common shareholders	Net income attributable to common shareholders	$	108.4	$	62.8	Net income attributable to common shareholders	$	105.0	$	108.4

Average basic shares outstanding	Average basic shares outstanding	58.2		58.8		Average basic shares outstanding	57.1		58.2
Effect of dilutive share-based awards	Effect of dilutive share-based awards	0.7		0.8		Effect of dilutive share-based awards	0.8		0.7
Average diluted shares outstanding	Average diluted shares outstanding	58.9		59.6		Average diluted shares outstanding	57.9		58.9

Earnings per basic share:						Earnings per basic share:
Earnings per basic share from continuing operations						Earnings per basic share from continuing operations	$	1.66	$	1.79
Earnings per basic share from discontinued operations						Earnings per basic share from discontinued operations	0.18		0.10
Earnings per basic share	Earnings per basic share	$	1.86	$	1.07	Earnings per basic share	$	1.84	$	1.89

Earnings per diluted share:						Earnings per diluted share:
Earnings per diluted share from continuing operations						Earnings per diluted share from continuing operations	$	1.64	$	1.75
Earnings per diluted share from discontinued operations						Earnings per diluted share from discontinued operations	0.17		0.09
Earnings per diluted share	Earnings per diluted share	$	1.84	$	1.05	Earnings per diluted share	$	1.81	$	1.84

The computation of diluted earnings per share excludes the effect of the potentially anti-dilutive securities which was ~~1.8~~0.3 million and ~~1.4~~1.8 million for the three ~~month periods ending~~months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Changes in Equity and Accumulated Other Comprehensive Loss

A summary of changes in equity for the year-to-date interim periods ended March 31, ~~2021~~2022 and ~~2020~~2021 is provided below:


(in millions, except share data)	(in millions, except share data)	Common Shares Issued at Par Value	Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Share- holders’ Equity		Non-controlling Interest		Total Equity		(in millions, except share data)	Common Shares Issued at Par Value	Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Share- holders’ Equity		Non-controlling Interest		Total Equity
BALANCE DECEMBER 31, 2021																	BALANCE DECEMBER 31, 2021	72.4	$	363.9	$	2,527.3	$	(440.2)	$	(691.1)	$	1,832.3	$	2.8	$	1,835.1
Net income																	Net income	—	—		105.0		—		—		105.0		—		105.0
Cash dividends ($0.47 per share)																	Cash dividends ($0.47 per share)	—	—		(26.4)		—		—		(26.4)		—		(26.4)
Reacquisition on open market of 1,699,949 shares																	Reacquisition on open market of 1,699,949 shares	—	—		—		—		(175.8)		(175.8)		—		(175.8)
Exercise of stock options, net of shares reacquired of 79,214 shares																	Exercise of stock options, net of shares reacquired of 79,214 shares	—	—		—		—		6.1		6.1		—		6.1
Impact from settlement of share-based awards, net of shares acquired																	Impact from settlement of share-based awards, net of shares acquired	—	(5.1)		—		—		(0.3)		(5.4)		—		(5.4)
Stock-based compensation expense																	Stock-based compensation expense	—	5.9		—		—		—		5.9		—		5.9
Changes in pension and postretirement plan assets and benefit obligation, net of tax																	Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		3.3		—		3.3		—		3.3
Currency translation adjustment																	Currency translation adjustment	—	—		—		(21.7)		—		(21.7)		0.1		(21.6)
BALANCE MARCH 31, 2022																	BALANCE MARCH 31, 2022	72.4	$	364.7	$	2,605.9	$	(458.6)	$	(861.1)	$	1,723.3	$	2.9	$	1,726.2

BALANCE DECEMBER 31, 2020	BALANCE DECEMBER 31, 2020	72.4	$	330.7	$	2,192.8	$	(466.4)	$	(600.6)	$	1,528.9	$	2.2	$	1,531.1	BALANCE DECEMBER 31, 2020	72.4	$	330.7	$	2,192.8	$	(466.4)	$	(600.6)	$	1,528.9	$	2.2	$	1,531.1
Net income	Net income	—	—		108.4		—		—		108.4		0		108.4		Net income	—	—		108.4		—		—		108.4		—		108.4
Cash dividends ($0.43 per share)	Cash dividends ($0.43 per share)	—	—		(25.0)		—		—		(25.0)		—		(25.0)		Cash dividends ($0.43 per share)	—	—		(25.0)		—		—		(25.0)		—		(25.0)

Impact from settlement of share-based awards, net of shares acquired	Impact from settlement of share-based awards, net of shares acquired	—	(2.3)		—		—		9.5		7.2		—		7.2		Impact from settlement of share-based awards, net of shares acquired	—	(2.3)		—		—		9.5		7.2		—		7.2
Stock-based compensation expense	Stock-based compensation expense	—	6.3		—		—		—		6.3		—		6.3		Stock-based compensation expense	—	6.3		—		—		—		6.3		—		6.3
Changes in pension and postretirement plan assets and benefit obligation, net of tax	Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		4.9		—		4.9		—		4.9		Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		4.9		—		4.9		—		4.9
Currency translation adjustment	Currency translation adjustment	—	—		—		(35.7)		—		(35.7)		0.8		(34.9)		Currency translation adjustment	—	—		—		(35.7)		—		(35.7)		0.8		(34.9)
BALANCE MARCH 31, 2021	BALANCE MARCH 31, 2021	72.4	$	334.7	$	2,276.2	$	(497.2)	$	(591.1)	$	1,595.0	$	3.0	$	1,598.0	BALANCE MARCH 31, 2021	72.4	$	334.7	$	2,276.2	$	(497.2)	$	(591.1)	$	1,595.0	$	3.0	$	1,598.0

(in millions, except share data) Common
Shares
Issued at
Par Value Capital
Surplus Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Total
Share- holders’
Equity Non-controlling
Interest Total
Equity
BALANCE DECEMBER 31, 2019 72.4 $ 315.6 $ 2,112.2 $ (483.7) $ (542.8) $ 1,473.7 $ 2.6 $ 1,476.3
Net income — — 62.8 — — 62.8 0 62.8
Cash dividends ($0.43 per share) — — (25.5) — — (25.5) — (25.5)
Reacquisition on open market of 1,221,233 shares — — — — (70.0) (70.0) — (70.0)
Impact from settlement of share-based awards, net of shares acquired — (6.0) — — 6.0 0 — 0
Stock-based compensation expense — 5.8 — — — 5.8 — 5.8
Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 3.6 — 3.6 — 3.6
Currency translation adjustment — — — (45.2) — (45.2) (0.3) (45.5)
BALANCE MARCH 31, 2020 72.4 $ 315.4 $ 2,149.5 $ (525.3) $ (606.8) $ 1,405.2 $ 2.3 $ 1,407.5

The table below provides the accumulated balances for each classification of accumulated other comprehensive income (loss), as reflected on our Condensed Consolidated Balance Sheets.


(in millions)	(in millions)		Defined Benefit Pension and Postretirement Items		Currency Translation Adjustment		Total a		(in millions)		Defined Benefit Pension and Postretirement Items		Currency Translation Adjustment		Total a
Balance as of December 31, 2020			$	(397.9)	$	(68.5)	$	(466.4)
Balance as of December 31, 2021									Balance as of December 31, 2021		$	(301.9)	$	(138.3)	$	(440.2)
		Other comprehensive income (loss) before reclassifications	—		(35.7)		(35.7)			Other comprehensive income (loss) before reclassifications	—		(21.7)		(21.7)
		Amounts reclassified from accumulated other comprehensive loss	4.9		—		4.9			Amounts reclassified from accumulated other comprehensive loss	3.3		—		3.3
Net period other comprehensive income (loss)	Net period other comprehensive income (loss)		4.9		(35.7)		(30.8)		Net period other comprehensive income (loss)		3.3		(21.7)		(18.4)
Balance as of March 31, 2021			$	(393.0)	$	(104.2)	$	(497.2)
Balance as of March 31, 2022									Balance as of March 31, 2022		$	(298.6)	$	(160.0)	$	(458.6)


a			Net of tax benefit of ~~$149.5~~$119.1 million and ~~$148.2~~$117.9 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the ~~three-month~~three month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021. Amortization of pension and postretirement components ~~have~~has been recorded within “Miscellaneous income, net” on our Condensed Consolidated Statements of Operations.


		Three Months Ended March 31,					Three Months Ended March 31,
(in millions)	(in millions)		2021		2020			(in millions)	2022		2021
Amortization of pension items:	Amortization of pension items:							Amortization of pension items:
Prior-service costs			$	0	$	(0.1)

Net loss	Net loss		6.5		4.8			Net loss	$	4.8	$	6.5
Amortization of postretirement items:	Amortization of postretirement items:							Amortization of postretirement items:
Prior-service costs			(0.3)		(0.3)
Prior service costs								Prior service costs	(0.3)		(0.3)

Total before tax	Total before tax		6.2		4.4			Total before tax	$	4.5	$	6.2
Tax impact	Tax impact		1.3		1.0			Tax impact	1.2		1.3
Total reclassifications for the period	Total reclassifications for the period		$	4.9	$	3.4		Total reclassifications for the period	$	3.3	$	4.9

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are as follows:


		Pension				Postretirement					Pension				Postretirement
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2022		2021		2022		2021
Service cost	Service cost	$	1.5	$	1.6	$	0.1	$	0.1	Service cost	$	1.3	$	1.5	$	0.1	$	0.1
Interest cost	Interest cost	5.1		6.6		0.2		0.2		Interest cost	5.2		5.1		0.2		0.2
Expected return on plan assets	Expected return on plan assets	(14.1)		(14.7)		0		0		Expected return on plan assets	(13.9)		(14.1)		—		—
Recognized curtailment gain	Recognized curtailment gain	(0.7)		—		—		—		Recognized curtailment gain	—		(0.7)		—		—
Amortization of prior service cost	Amortization of prior service cost	0		(0.1)		(0.3)		(0.3)		Amortization of prior service cost	—		—		(0.3)		(0.3)
Amortization of net loss	Amortization of net loss	6.5		4.8		0		0		Amortization of net loss	4.8		6.5		—		—
Net periodic benefit	Net periodic benefit	$	(1.7)	$	(1.8)	$	0	$	0	Net periodic benefit	$	(2.6)	$	(1.7)	$	—	$	—

The components of net periodic benefit, other than the service cost component, are included in “Miscellaneous income, net” in our Condensed Consolidated Statements of Operations. Service cost is recorded within “Cost of sales” and “Selling, general and administrative” in our Condensed Consolidated Statements of Operations.

We expect to contribute the following to our pension and postretirement plans:

(in millions) Pension Postretirement
Expected contributions in 2021 $ 20.7 $ 2.6
Amounts contributed during the three months ended March 31, 2021 $ 15.7 $ 0.1


(in millions)	Pension		Postretirement
Expected contributions in 2022	$	18.9	$	2.6
Amounts contributed during the three months ended March 31, 2022	$	2.8	$	—

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Income Taxes

Effective Tax Rates

Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented.

Our effective tax rates are as follows:

Three Months Ended March 31,
2021 2020
Effective Tax Rate 20.9% 21.8%


	Three Months Ended March 31,
	2022	2021
Effective Tax Rate	25.0%	20.9%

Our effective tax rate attributable to continuing operations for the three months ended March 31, ~~2021~~2022 is ~~lower~~higher than the prior year’s comparable period primarily due to higher ~~tax credit utilization,~~non-U.S. taxes, partially offset by a ~~lower~~greater benefit related to share-based compensation.

Our effective tax rate attributable to continuing operations for the three months ended March 31, 2022 is higher than the statutory U.S. federal tax rate of 21% primarily due to earnings in jurisdictions with statutory tax rates higher than the U.S., expenses that are statutorily non-deductible for income tax purposes and U.S. state taxes, partially offset by excess share-based compensation benefits, tax credit utilization, and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

~~Our tax rate for the three months ended March 31, 2021 is approximately equal to the statutory U.S. federal tax rate of 21%.~~

Unrecognized Tax Benefits

During the three months ended March 31, ~~2021,~~2022, our gross unrecognized tax benefits, excluding interest and penalties, ~~decreased~~increased by ~~$0.1~~$0.4 million, primarily ~~as a result of decreases~~ due to ~~settlements and expiration of statutes of limitations in the current year, partially offset by~~ increases in tax positions taken in the current ~~and prior periods.~~ period, partially offset by reductions from expiration of statutes of limitations.During the three months ended March 31, ~~2021,~~2022, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate ~~decreased~~increased by ~~$0.1~~$0.6 million. The difference between these amounts relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes.

During the three months ended March 31, ~~2021,~~2022, we recognized ~~$0.1~~$0.3 million of interest ~~and penalty~~ expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. As of March 31, ~~2021~~2022, and December 31, ~~2020,~~2021, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was ~~$7.6~~$5.2 million and ~~$7.5~~$4.9 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by ~~$9.4~~$6.6 million due to expiration of statutes of limitations and settlements with tax authorities. However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, we will record additional income tax expense or benefit in the period in which such matters are effectively settled.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 9 - Goodwill and Intangible Assets

Our business acquisitions have typically resulted in the recognition of goodwill and other intangible assets. We follow the provisions under ASC Topic 350, “Intangibles – Goodwill and Other” as it relates to the accounting for goodwill in our condensed consolidated financial statements. These provisions require that we, on at least an annual basis, evaluate the fair value of the reporting units to which goodwill is assigned and attributed and compare that fair value to the carrying value of the reporting unit to determine if an impairment has occurred. We perform our annual impairment testing during the fourth quarter. Impairment testing takes place more often than annually if events or circumstances indicate a change in status that would indicate a potential impairment. We believe that there have been no events or circumstances which would more likely than not reduce the fair value for our reporting units below its carrying value. A reporting unit is an operating segment unless discrete financial information is prepared and reviewed by segment management for businesses one level below that operating segment (a “component”), in which case the component would be the reporting unit. As of March 31, ~~2021,~~2022, we had 7 reporting units. In the second quarter of 2021, the assets and liabilities of our Engineered Materials segment (which was a separate reportable segment and reporting unit) were classified as held for sale. Please see Note 2 for additional details.

Intangibles with indefinite useful lives, consisting of trade names, are tested annually for impairment, or when events or changes in circumstances indicate the potential for impairment. If the carrying amount of an indefinite lived intangible asset exceeds its fair value, the intangible asset is written down to its fair value. Fair value is calculated using relief from royalty method. We amortize the cost of definite-lived intangibles over their estimated useful lives. We also review all of our definite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Changes to goodwill are as follows:

(in millions) Fluid Handling Payment & Merchandising Technologies Aerospace & Electronics Engineered Materials Total
Balance as of December 31, 2020 $ 360.0 $ 875.2 $ 202.5 $ 171.3 $ 1,609.0
Adjustments to purchase price allocations (0.1) — — — (0.1)
Currency translation (4.9) (8.9) — — (13.8)
Balance at March 31, 2021 $ 355.0 $ 866.3 $ 202.5 $ 171.3 $ 1,595.1

For the three months ended March 31, 2021, adjustments of $0.1 million represent the finalization of the purchase price allocation for the acquisition of I&S. See a discussion in Note 2, “Acquisitions” for further details.


(in millions)	Aerospace & Electronics		Process Flow Technologies		Payment & Merchandising Technologies		Total
Balance as of December 31, 2021	$	202.5	$	349.4	$	860.6	$	1,412.5


Currency translation	—		(3.3)		(6.5)		(9.8)
Balance at March 31, 2022	$	202.5	$	346.1	$	854.1	$	1,402.7

As of March 31, ~~2021,~~2022, we had ~~$503.0~~$452.1 million of net intangible assets, of which ~~$71.0~~$70.4 million were intangibles with indefinite useful lives. As of December 31, ~~2020,~~2021, we had ~~$520.3~~$465.9 million of net intangible assets, of which ~~$70.9~~$70.6 million were intangibles with indefinite useful lives.

Changes to intangible assets are as follows:


(in millions)	(in millions)	Three Months Ended March 31, 2021		Year Ended December 31, 2020		(in millions)	Three Months Ended March 31, 2022		Year Ended December 31, 2021
Balance at beginning of period, net of accumulated amortization	Balance at beginning of period, net of accumulated amortization	$	520.3	$	505.1	Balance at beginning of period, net of accumulated amortization	$	465.9	$	519.1
Additions		0		52.5

Amortization expense	Amortization expense	(11.5)		(48.4)		Amortization expense	(10.6)		(44.5)
Currency translation		(5.8)		11.1
Currency translation and other						Currency translation and other	(3.2)		(8.7)
Balance at end of period, net of accumulated amortization	Balance at end of period, net of accumulated amortization	$	503.0	$	520.3	Balance at end of period, net of accumulated amortization	$	452.1	$	465.9

For the year ended December 31, 2020, additions to intangible assets represent the purchase price allocation related to the January 2020 acquisition of I&S. See discussion in Note 2, “Acquisitions” for further details.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets follows:


			March 31, 2021						December 31, 2020								March 31, 2022						December 31, 2021
(in millions)	(in millions)	Weighted Average Amortization Period of Finite Lived Assets (in years)	Gross Asset		Accumulated Amortization		Net		Gross Asset		Accumulated Amortization		Net		(in millions)	Weighted Average Amortization Period of Finite Lived Assets (in years)	Gross Asset		Accumulated Amortization		Net		Gross Asset		Accumulated Amortization		Net
Intellectual property rights	Intellectual property rights	15.2	$	137.7	$	58.6	$	79.1	$	138.2	$	58.4	$	79.8	Intellectual property rights	15.2	$	131.4	$	54.4	$	77.0	$	131.9	$	54.3	$	77.6
Customer relationships and backlog	Customer relationships and backlog	18.4	656.2		287.8		368.4		663.6		280.6		383.0		Customer relationships and backlog	18.3	606.4		275.1		331.3		611.8		270.1		341.8
Drawings	Drawings	40	11.1		10.5		0.6		11.1		10.5		0.6		Drawings	40	11.1		10.6		0.5		11.1		10.6		0.5
Other	Other	11.7	143.5		88.6		54.9		144.9		88.0		56.9		Other	11.8	136.4		93.1		43.3		137.4		91.3		46.0
Total	Total	17.8	$	948.5	$	445.5	$	503.0	$	957.8	$	437.5	$	520.3	Total	17.8	$	885.3	$	433.2	$	452.1	$	892.2	$	426.3	$	465.9

Future amortization expense associated with intangible assets is expected to be:


(in millions)	(in millions)			(in millions)
Remainder of 2021		$	33.3
2022		42.9
Remainder of 2022				Remainder of 2022	$	32.0
2023	2023	42.8		2023	42.0
2024	2024	42.0		2024	41.2
2025 and after		271.0
2025				2025	35.7
2026 and after				2026 and after	230.8

Note 10 - Accrued Liabilities

Accrued liabilities consist of:


(in millions)	(in millions)	March 31, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021
Employee related expenses	Employee related expenses	$	107.3	$	124.3	Employee related expenses	$	89.0	$	175.1
Warranty	Warranty	11.5		9.4		Warranty	7.3		7.3
Current lease liabilities	Current lease liabilities	23.5		23.4		Current lease liabilities	22.0		22.5
Contract liabilities	Contract liabilities	95.5		103.0		Contract liabilities	96.5		101.1
Other	Other	136.9		135.8		Other	118.3		124.7
Total	Total	$	374.7	$	395.9	Total	$	333.1	$	430.7

We accrue warranty liabilities when it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Warranty provision is included within “Cost of sales” in our Condensed Consolidated Statements of Operations.

The following table summarizes warranty activity recorded during the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.


							Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Balance at beginning of period	Balance at beginning of period	$	9.4	$	11.0	Balance at beginning of period	$	7.3	$	8.1
Expense	Expense	3.2		2.6		Expense	1.0		3.1
Changes due to acquisitions		0		0.3

Payments / deductions	Payments / deductions	(1.0)		(3.0)		Payments / deductions	(0.8)		(0.9)
Currency translation	Currency translation	(0.1)		(0.1)		Currency translation	(0.2)		(0.1)
Balance at end of period	Balance at end of period	$	11.5	$	10.8	Balance at end of period	$	7.3	$	10.2

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 11 - Commitments and Contingencies

Asbestos Liability

Information Regarding Claims and Costs in the Tort System

As of March 31, ~~2021,~~2022, we were a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos. Activity related to asbestos claims during the periods indicated was as follows:


		Three Months Ended		Year Ended	Three Months Ended					Year Ended
		March 31,		December 31,	March 31,					December 31,
		2021	2020			2020		2022	2021		2021
Beginning claims	Beginning claims	29,138	29,056			29,056	Beginning claims	29,958	29,138		29,138
New claims	New claims	733	681			2,620	New claims	657	733		2,975
Settlements	Settlements	(160)	(165)			(885)	Settlements	(201)	(160)		(980)
Dismissals	Dismissals	(304)	(410)			(1,653)	Dismissals	(102)	(304)		(1,175)

Ending claims	Ending claims	29,407	29,162			29,138	Ending claims	30,312	29,407		29,958

Of the ~~29,407~~30,312 pending claims as of March 31, ~~2021,~~2022, approximately 18,000 claims were pending in New York of which approximately 16,000 are non-malignancy claims that were filed over 15 years ago and have been inactive under New York court orders.

We have tried several cases resulting in defense verdicts by the jury or directed verdicts for the defense by the court. We further have pursued appeals of certain adverse jury verdicts that have resulted in reversals in favor of the defense. We have also tried several other cases resulting in plaintiff verdicts which we paid or settled after unsuccessful appeals.

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us for the three months ended March 31, 2022 and 2021 ~~and 2020~~ totaled ~~$9.1~~$13.0 million and ~~$12.6~~$9.1 million, respectively. In contrast to the recognition of settlement and defense costs, which reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several months or more, and may show some fluctuation from period to period. Cash payments of settlement amounts are not made until all releases and other required documentation are received by us, and reimbursements of both settlement amounts and defense costs by insurers may be uneven due to insurer payment practices, transitions from one insurance layer to the next excess layer and the payment terms of certain reimbursement agreements. Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the three months ended March 31, 2022 and, 2021 ~~and, 2020~~ totaled ~~$10.8~~$7.5 million and ~~$11.7~~$10.8 million, respectively. Detailed below are the comparable amounts for the periods indicated.


												Three Months Ended					Year Ended
		Three Months Ended				Year Ended		March 31,								December 31,
(in millions)	(in millions)	March 31,				December 31,	(in millions)	2022				2021					2021
		2021		2020					2020
Settlement / indemnity costs incurred (1)	Settlement / indemnity costs incurred (1)	$	5.5	$	8.2				$	35.3	Settlement / indemnity costs incurred (1)	$	10.5	$	5.5			$	40.6
Defense costs incurred (1)	Defense costs incurred (1)	3.6		4.4					15.6		Defense costs incurred (1)	2.5		3.6				14.6
Total costs incurred	Total costs incurred	$	9.1	$	12.6				$	50.9	Total costs incurred	$	13.0	$	9.1			$	55.2

Settlement / indemnity payments	Settlement / indemnity payments	$	10.1	$	11.0				$	24.7	Settlement / indemnity payments	$	9.6	$	10.1			$	42.6
Defense payments	Defense payments	3.2		4.3					16.7		Defense payments	2.1		3.2				15.4
Insurance receipts	Insurance receipts	(2.5)		(3.6)					(10.3)		Insurance receipts	(4.2)		(2.5)				(13.1)
Pre-tax cash payments, net	Pre-tax cash payments, net	$	10.8	$	11.7				$	31.1	Pre-tax cash payments, net	$	7.5	$	10.8			$	44.9

(1) Before insurance recoveries and tax effects.

The amounts shown for settlement and defense costs incurred, and cash payments, are not necessarily indicative of future period amounts, which may be higher or lower than those reported.

Cumulatively through March 31, ~~2021,~~2022, we have resolved (by settlement or dismissal) approximately ~~142,000~~144,000 claims. The related settlement cost incurred by us and our insurance carriers is approximately ~~$684~~$730 million, for an average settlement cost per resolved claim of approximately ~~$4,800.~~$5,100. The average settlement cost per claim resolved during the years ended December 31, 2021, 2020 and 2019 was $18,800, $13,900, and ~~2018 was $13,900,~~ $15,800, ~~and $11,300,~~ respectively. Because claims are sometimes

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dismissed in large groups, the average cost per resolved claim, as well as the number of open claims, can fluctuate significantly from period to period. In addition to large group dismissals, the nature of the disease and corresponding settlement amounts for each claim resolved will also drive changes from period to period in the average settlement cost per claim. Accordingly, the average cost per resolved claim is not considered in our periodic review of our estimated asbestos liability. For a discussion regarding the four most significant factors affecting the liability estimate, see “Effects on the ~~Condensed~~ Consolidated Financial Statements.”

Effects on the ~~Condensed~~ Consolidated Financial Statements

We have retained an independent actuarial firm to assist management in estimating our asbestos liability in the tort system. The actuarial consultants review information provided by us concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the time lag from filing to disposition of the claim. The methodology used by the actuarial consultants to project future asbestos costs is based on our recent historical experience for claims filed, settled and dismissed during a base reference period. Our experience is then compared to estimates of the number of individuals likely to develop asbestos-related diseases determined based on widely used previously conducted epidemiological studies augmented with current data inputs. Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos. Using that information, the actuarial consultants estimate the number of future claims that would be filed against us and estimates the aggregate settlement or indemnity costs that would be incurred to resolve both pending and future claims based upon the average settlement costs by disease during the reference period. This methodology has been accepted by numerous courts. After discussions with us, the actuarial consultants augment our liability estimate for the costs of defending asbestos claims in the tort system using a forecast from us which is based upon discussions with our defense counsel. Based on this information, the actuarial consultants compile an estimate of our asbestos liability for pending and future claims using a range of reference periods based on claim experience and claims expected to be filed through the indicated forecast period. The most significant factors affecting the liability estimate are (1) the number of new mesothelioma claims filed against us, (2) the average settlement costs for mesothelioma claims, (3) the percentage of mesothelioma claims dismissed against us and (4) the aggregate defense costs incurred by us. These factors are interdependent, and no one factor predominates in determining the liability estimate.

In our view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year; the jurisdictions where such claims are filed, and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits; and the likelihood of any comprehensive asbestos legislation at the federal level. In addition, the dynamics of asbestos litigation in the tort system have been significantly affected by the substantial number of companies that have filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which have been estimated to provide $36 billion for payments to current and future claimants. These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of our asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods. Accordingly, management continues to monitor these trend factors over time and periodically assesses whether an alternative forecast period is appropriate.

Each quarter, the actuarial consultants compile an update based upon our experience in claims filed, settled and dismissed as well as average settlement costs by disease category (mesothelioma, lung cancer, other cancer, and non-malignant conditions including asbestosis). In addition to this claims experience, we also consider additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. As part of this process, we also consider trends in the tort system such as those enumerated above. Management considers all these factors in conjunction with the liability estimate of the actuarial consultants and determines whether a change in the estimate is warranted.

Liability Estimate. In June 2016, the New York State Court of Appeals issued its opinion in Dummitt v. Crane Co., affirming a 2012 verdict for $4.9 million against us. In that opinion, the court ruled that in certain circumstances we are legally responsible for asbestos-containing materials made and sold by third parties that others attached post-sale to our equipment. This decision provided clarity regarding the nature of claims that may proceed to trial in New York and greater predictability regarding future claim activity. We also reflected the impact of the Dummitt decision on our expected settlement values. Accordingly, on December 31, 2016, we updated and extended our asbestos liability estimate through 2059, the generally accepted end point.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Following our experience in the tort system post the Dummitt decision, we entered into several, increasingly similar, group settlements with various plaintiff firms and we expect this new trend of these types of group settlements to continue. Accordingly, effective as of December 31, 2019, we updated our estimate of the asbestos liability, including revised costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against us through the same expected end point of 2059. Our estimate of the asbestos liability for pending and future claims through 2059 is based on the projected future asbestos costs resulting from our experience using a range of reference periods for claims filed, settled and dismissed. Based on this estimate, we recorded an additional liability of $255 million as of December 31, 2019.

An aggregate liability of $712 million iswas recorded as of December 31, 2019 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2059, of which approximately 85% is attributable to settlement and defense costs for future claims projected to be filed through 2059. The liability is reduced when cash payments are made in respect of settled claims and defense costs. The liability was ~~$657~~$600 million and ~~$670~~$612 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. It is not possible to forecast when cash payments related to the asbestos liability will be fully expended; however, it is expected such cash payments will continue for a number of years past 2059, due to the significant proportion of future claims included in the estimated asbestos liability and the lag time between the date a claim is filed and when it is resolved. None of these estimated costs have been discounted to present value due to the inability to reliably forecast the timing of payments. The current portion of the total estimated liability at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 is ~~$66.5~~$62.3 million ~~respectively~~ and represents our best estimate of total asbestos costs expected to be paid during the twelve-month period. Such amount is based upon the actuarial model together with our prior year payment experience for both settlement and defense costs.

We have made our best estimate of the costs through 2059. Through March 31, ~~2021,~~2022, our actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in our liability estimate. In addition to this claims experience, we considered additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. Based on this evaluation, we determined that no change in the estimate was warranted for the period ended March 31, ~~2021.~~2022.

Insurance Coverage and Receivables. Prior to 2005, a significant portion of our settlement and defense costs were paid by our primary insurers. With the exhaustion of that primary coverage, we began negotiations with our excess insurers to reimburse us for a portion of our settlement and/or defense costs as incurred. To date, we have entered into agreements providing for such reimbursements, known as “coverage-in-place,” with eleven of our excess insurer groups. Under such coverage-in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage for our present and future asbestos claims on specified terms and conditions that address, among other things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and the expiration of the insurer’s obligations. Similarly, under a variant of coverage-in-place, we have entered into an agreement with a group of insurers confirming the aggregate amount of available coverage under the subject policies and setting forth a schedule for future reimbursement payments to us based on aggregate indemnity and defense payments made. In addition, with ten of our excess insurer groups, we entered into agreements settling all asbestos and other coverage obligations for an agreed sum and received a total of $82.5 million in aggregate as a result of those settlements. Reimbursements from insurers for past and ongoing settlement and defense costs allocable to their policies have been made in accordance with these coverage-in-place and other agreements. All these agreements include provisions for mutual releases, indemnification of the insurer and, for coverage-in-place, claims handling procedures. With the agreements referenced above, we have concluded settlements with all but two of our solvent excess insurers with policies expected to respond to the aggregate costs included in the liability estimate. The first such insurer, which issued a single applicable policy, has been paying for many years the shares of defense and indemnity costs we have allocated to it, subject to a reservation of rights. The second insurer issued a single applicable policy in a layer of coverage that we do not anticipate reaching until many years from now, and, prior to the policy being reached, we anticipate opening a dialogue with that insurer about the execution of a suitable agreement. There are no pending legal proceedings between us and any insurer contesting our asbestos claims under our insurance policies.

In conjunction with developing the aggregate updated liability estimate referenced above, we also developed an updated estimate of probable insurance recoveries for our asbestos liabilities. In developing this estimate, we considered our coverage-in-place and other settlement agreements described above, as well as several additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits. In addition, the timing and amount of reimbursements will vary because our insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage. In addition to consulting with legal counsel on these insurance matters, we retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

liability estimate described above and assuming the continued viability of all solvent insurance carriers. Based upon the analysis of policy terms and other factors noted above by our legal counsel, and incorporating risk mitigation judgments by us where policy terms or other factors were not certain, our insurance consultants compiled a model indicating how our historical insurance policies would respond to varying levels of asbestos settlement and defense costs and the allocation of such costs between such insurers and us. Using the estimated liability as of December 31, 2019 (for claims filed or expected to be filed through 2059), the insurance consultant’s model forecasted that approximately 14% of the liability would be reimbursed by our insurers. While there are overall limits on the aggregate amount of insurance available to us with respect to asbestos claims, certain limits were not reached by the total estimated liability currently recorded by us, and such overall limits did not influence our determination of the asset amount to record. We allocate to ourselves the amount of the asbestos liability (for claims filed or expected to be filed through 2059) that is in excess of available insurance coverage allocated to such years. An asset of $98 million was recorded as of December 31, 2019 representing the probable insurance reimbursement for claims expected through 2059. The asset is reduced as reimbursements and other payments from insurers are received. The asset was ~~$84~~$70 million and ~~$87~~$74 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

We review the estimated reimbursement rate with our insurance consultants on a periodic basis in order to confirm overall consistency with our established reserves. The reviews encompass consideration of the performance of the insurers under coverage-in-place agreements and the effect of any additional lump-sum payments under other insurer agreements. Actual insurance reimbursements vary from period to period, and will decline over time, for the reasons cited above.

Uncertainties. Estimation of our ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and quantity of claims and the manner of their resolution. We caution that our estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on past experience that may not prove reliable as predictors; the assumptions are interdependent and no single factor predominates in determining the liability estimate. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would substantial adverse verdicts at trial that withstand appeal. A legislative solution, structured settlement transaction, or significant change in relevant case law could also change the estimated liability.

The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance reimbursements, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, due to the uncertainties inherent in litigation matters, no assurances can be given regarding the outcome of any litigation, if necessary, to enforce our rights under our insurance policies or settlement agreements.

Many uncertainties exist surrounding asbestos litigation, and we will continue to evaluate our estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts. These uncertainties may result in our incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly, or if there are significant developments in the trend of case law or court procedures, or if legislation or another alternative solution is implemented. Although the resolution of these claims will likely take many years, the effect on the results of operations, financial position and cash flow in any given period from a revision to these estimates could be material.

Other Contingencies

Environmental Matters

For environmental matters, we record a liability for estimated remediation costs when it is probable that we will be responsible for such costs and they can be reasonably estimated. Generally, third party specialists assist in the estimation of remediation costs. The environmental remediation liability as of March 31, ~~2021~~2022 is substantially related to the former manufacturing site in Goodyear, Arizona (the “Goodyear Site”) discussed below. On June 21, 2021, we completed the sale of substantially all of the property associated with what we have historically called the Goodyear Site for $8.7 million, retaining only a small parcel on which our remediation and treatment systems are located. We will continue to be responsible for all remediation costs associated with the Goodyear Site.

Goodyear Site

The Goodyear Site was operated by Unidynamics/Phoenix, Inc. (“UPI”), which became an indirect subsidiary in 1985 when we acquired UPI’s parent company, UniDynamics Corporation. UPI manufactured explosive and pyrotechnic compounds,

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

including components for critical military programs, for the U.S. government at the Goodyear Site from 1962 to 1993, under contracts with the Department of Defense and other government agencies and certain of their prime contractors. In 1990, the U.S. Environmental Protection Agency (“EPA”) issued administrative orders requiring UPI to design and carry out certain

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

remedial actions, which UPI has done. Groundwater extraction and treatment systems have been in operation at the Goodyear Site since 1994. On July 26, 2006, we entered into a consent decree with the EPA with respect to the Goodyear Site providing for, among other things, a work plan for further investigation and remediation activities (inclusive of a supplemental remediation investigation and feasibility study). During the third quarter of 2014, the EPA issued a Record of Decision (“ROD”) amendment permitting, among other things, additional source area remediation resulting in us recording a charge of $49.0 million, extending the accrued costs through 2022. Following the 2014 ROD amendment, we continued our remediation activities and explored an alternative strategy to accelerate remediation of the site. During the fourth quarter of 2019, we received conceptual agreement from the EPA on our alternative remediation strategy which is expected to further reduce the contaminant plume. Accordingly, in 2019, we recorded a pre-tax charge of $18.9 million, net of reimbursements, to extend our forecast period through 2027 and reflect our revised workplan. The total estimated gross liability was ~~$37.5~~$30.6 million and ~~$39.8~~$32.3 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively and as described below, a portion is reimbursable by the U.S. Government. The current portion of the total estimated liability was ~~$10.9~~$7.8 million and $7.1 million as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021, respectively, and represents our best estimate, in consultation with our technical advisors, of total remediation costs expected to be paid during the twelve-month period. It is not possible at this point to reasonably estimate the amount of any obligation in excess of our current accruals through the 2027 forecast period because of the aforementioned uncertainties, in particular, the continued significant changes in the Goodyear Site conditions and additional expectations of remediation activities experienced in recent years.

On July 31, 2006, we entered into a consent decree with the U.S. Department of Justice on behalf of the Department of Defense and the Department of Energy pursuant to which, among other things, the U.S. Government reimburses us for 21% of qualifying costs of investigation and remediation activities at the Goodyear Site. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we recorded a receivable of ~~$7.3~~$6.6 million and ~~$7.8~~$7.3 million, respectively, for the expected reimbursements from the U.S. Government in respect of the aggregate liability as at that date. The receivable is reduced as reimbursements and other payments from the U.S. Government are received.

Other Environmental Matters

Marion, IL Site

We have been identified as a potentially responsible party (“PRP”) with respect to environmental contamination at the Crab Orchard National Wildlife Refuge Superfund Site (the “Crab Orchard Site”). The Crab Orchard Site is located near Marion, Illinois, and consists of approximately 55,000 acres. Beginning in 1941, the United States used the Crab Orchard Site for the production of ordnance and other related products for use in World War II. In 1947, about half of the Crab Orchard Site was leased to a variety of industrial tenants whose activities (which continue to this day) included manufacturing ordnance and explosives. A predecessor of us formerly leased portions of the Crab Orchard Site and conducted manufacturing operations at the Crab Orchard Site from 1952 until 1964. General Dynamics Ordnance and Tactical Systems, Inc. (“GD-OTS”) is in the process of conducting a remedial investigation and feasibility study for a portion of the Crab Orchard Site (the “AUS-OU”), which includes an area where we maintained operations, pursuant to an Administrative Order on Consent. A remedial investigation report was approved in February 2015, and work on the feasibility study is underway. It is unclear when the final feasibility study will be completed, or when a final Record of Decision may be issued.

GD-OTS has asked us to participate in a voluntary, multi-party mediation exercise with respect to response costs it has incurred or will incur with respect to the AUS-OU. We and other PRPs executed a non-binding mediation agreement on March 16, 2015, and the U.S. government executed the mediation agreement on August 6, 2015. The first phase of the mediation, involving certain former munitions or ordnance storage areas, began in November 2017, but did not result in a multi-party settlement agreement. Subsequently, we entered into discussions directly with GD-OTS and reached an ~~agreement-in-principle with GD-OTS~~agreement, as of July 13, 2021, to contribute toward GD-OTS’s past RI-FS costs associated with the first-phase areas for ~~a non-material~~an immaterial amount. We have also agreed to pay a modest percentage of future RI-FS costs and the United States’ claimed past response costs relative to the first-phase areas, a sum that we expect in the aggregate to be immaterial. We understand that GD-OTS has also reached agreements-in-principle with the U.S. Government and the other participating PRPs related to the first-phase areas of concern. Negotiations between GD-OTS and the U.S. Government are underway with respect to resolution of the remaining areas of the site, including those portions of the Crab Orchard Site where our predecessor conducted manufacturing and research activities. We at present cannot predict whether these further negotiations will result in an agreement, or when any determination of the ultimate allocable shares of the various PRPs, including the U.S. Government, is likely to be completed. It is not possible at this time to reasonably estimate the total amount of any obligation for remediation of the Crab Orchard Site as a whole because the allocation among PRPs, selection of remediation alternatives,

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and concurrence of regulatory authorities have not yet advanced to the stage where a reasonable estimate can be made. We notified our insurers of this potential liability and have obtained defense and indemnity coverage, subject to reservations of rights, under certain of our insurance policies.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Roseland, NJ Site

The Roseland Site was operated by Resistoflex Corporation (“Resistoflex”), which became an indirect subsidiary of ~~the Company~~ours in 1985 when ~~the Company~~we acquired Resistoflex’s parent company, UniDynamics Corporation. Resistoflex manufactured specialty lined pipe and fittings at the site from the 1950s until it was closed in the mid-1980s. ~~The Company~~We undertook an extensive soil remediation effort at the Roseland Site following ~~its~~our closure and had been monitoring the Site’s condition in the years that followed. In response to changes in remediation standards, in 2014 ~~the Company~~we began to conduct further site characterization and delineation studies at the Site. ~~The Company is~~We are in the late stages of ~~its~~our remediation activities at the Site, which ~~includes~~include a comprehensive delineation of contaminants of concern in soil, groundwater, surface water, sediment, and indoor air testing, all in accordance with the New Jersey Department of Environmental Protection guidelines and directives.

Other Proceedings

We regularly review the status of lawsuits, claims and proceedings that have been or may be asserted against us relating to the conduct of our business, including those pertaining to product liability, patent infringement, commercial, employment, employee benefits, environmental and stockholder matters. We record a provision for a liability for such matters when it is considered probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions, if any, are reviewed quarterly and adjusted as additional information becomes available. If either or both of the criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred. If there is a reasonable possibility that a loss or additional loss may have been incurred for such matters, we disclose the estimate of the amount of loss or range of loss, disclose that the amount is immaterial, or disclose that an estimate of loss cannot be made, as applicable. We believe that as of March 31, ~~2021,~~2022, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters, and that adequate provision has been made in our financial statements for the potential impact of all such matters.

Note 12 - Financing

Our debt consisted of the following:


(in millions)	(in millions)	March 31, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021

Commercial paper	Commercial paper	$	0	$	27.2	Commercial paper	$	104.0	$	—
364-Day Credit Agreement		346.9		348.5

Total short-term borrowings	Total short-term borrowings	$	346.9	$	375.7	Total short-term borrowings	$	104.0	$	—

4.45% notes due December 2023	4.45% notes due December 2023	$	299.2	$	299.1	4.45% notes due December 2023	$	299.5	$	299.4
6.55% notes due November 2036	6.55% notes due November 2036	198.5		198.4		6.55% notes due November 2036	198.5		198.5
4.20% notes due March 2048	4.20% notes due March 2048	346.2		346.2		4.20% notes due March 2048	346.4		346.3
Other deferred financing costs associated with credit facilities	Other deferred financing costs associated with credit facilities	(0.7)		(0.8)		Other deferred financing costs associated with credit facilities	(1.7)		(1.8)
Total long-term debt	Total long-term debt	$	843.2	$	842.9	Total long-term debt	$	842.7	$	842.4

Debt discounts and debt issuance costs totaled $6.2 and $6.6 as of each of March 31, 2021 and December 31, 2020, respectively and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.
Debt discounts and debt issuance costs totaled $5.6 million and $5.7 million as of each of March 31, 2022 and December 31, 2021, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.						Debt discounts and debt issuance costs totaled $5.6 million and $5.7 million as of each of March 31, 2022 and December 31, 2021, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

AsCommercial paper program - On July 28, 2021, we increased the size of ~~March 31, 2021, there were no outstanding borrowings under~~ the commercial paper ~~program. At December 31, 2020, there was $27.2 million~~program (“CP Program”) to permit the issuance of ~~outstanding borrowings under the~~short-term, unsecured commercial paper ~~program. We issued~~notes in an aggregate principal amount not to exceed $650 million at any time outstanding. Prior to this increase, the CP Program permitted us to issue commercial paper notes in an aggregate principal amount not to exceed $550 million at any time outstanding. The other terms and conditions of ~~$100 million in January 2020 and $150 million in December 2020 to fund~~ the ~~acquisitions of I&S and Cummins-Allison, respectively. See discussion in Note 2, “Acquisitions” for further details.~~CP program remain the same. Amounts available under the ~~commercial paper program~~CP Program may be borrowed, repaid and re-borrowed from time to ~~time,~~time. The notes will have maturities of up to 397 days from date of issue. The notes rank at least pari passu with ~~the aggregate principal amount~~all of ~~the notes~~our other unsecured and unsubordinated indebtedness. As of March 31, 2022 and December 31, 2021, there was $104.0 million and $0.0 million, respectively, of outstanding borrowings under the commercial paper ~~program at any time not to exceed $550 million.~~program.

We also have a revolving credit agreement permitting borrowings of up to $550 million which expires in December 2022. The undrawn portion of this revolving credit agreement is also available to serve as a backstop facility for the issuance of commercial paper. In the first half of 2020, we repaid the outstanding amounts related to borrowings of $67 million used to fund the I&S acquisition in January 2020. See discussion in Note 2, “Acquisitions” for further details. As of March 31, 2021 and December 31, 2020, there were 0 outstanding borrowings.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In April 2020, to enhance financial flexibility and maintain maximum liquidity in response to the uncertainty in the global markets resulting from the COVID-19 pandemic, we entered into a senior unsecured 364-day credit facility (the “364-Day Credit Agreement”). As of March 31, 2021 and December 31, 2020, there was $346.9 million and $348.5 million outstanding under the 364-Day Credit Agreement, respectively. On April 15, 2021, we repaid the amount outstanding under the 364-Day Credit Agreement with cash on hand and the issuance of commercial paper.

Note 13 - Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability. The standards also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standards describe three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices in active markets for identical or similar assets and liabilities.

Level 2: Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. Level 2 assets and liabilities include over-the-counter derivatives, principally forward foreign exchange contracts, whose value is determined using pricing models with inputs that are generally based on published foreign exchange rates and exchange traded prices, adjusted for other specific inputs that are primarily observable in the market or can be derived principally from or corroborated by observable market data.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Valuation Technique

The carrying value of our financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable approximate fair value, without being discounted, due to the short periods during which these amounts are outstanding.

We are exposed to certain risks related to our ongoing business operations, including market risks related to fluctuation in currency exchange. We use foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on our earnings and cash flows. We do not hold or issue derivative financial instruments for trading or speculative purposes. Foreign exchange contracts ~~are~~ not designated as hedging instruments ~~and~~ had a notional value of ~~$44.2~~$94.0 million and ~~$34.2~~$3.0 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Our derivative assets and liabilities include foreign exchange contract derivatives that are measured at fair value using internal models based on observable market inputs such as forward rates and interest rates. Based on these inputs, the derivatives are classified within Level 2 of the valuation hierarchy. Such derivative receivable amounts are recorded within “Other current assets” on our Condensed Consolidated Balance Sheets and were ~~$0.6~~$1.6 million and ~~less than $0.1~~$0.0 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Such derivative liability amounts are recorded within “Accrued liabilities” on our Condensed Consolidated Balance Sheets and were ~~and~~ $0.0 million and less than $0.1 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Available-for-sale securities consist of ~~marketable debt securities and~~ rabbi trust investments. Marketable debt securities consist of commercial paper which are measured at fair value using prices for comparable securities in active markets, and are therefore classified within Level 2 of the valuation hierarchy. The fair value of the commercial paper was $10.0 million and $30 million as of March 31, 2021 and December 31, 2020, respectively. These investments ~~are included in “Other current assets” on our Condensed Consolidated Balance Sheets. We also have two rabbi trusts~~ that hold marketable securities for the benefit of participants in our Supplemental Executive Retirement Plan. These investments are measured at fair value using quoted market prices in an active market and are therefore classified within Level 1 of the valuation hierarchy. The fair value of available-for-sale securities was ~~$1.5~~$0.6 million and $1.6 million as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively. These investments are included in “Other assets” on our Condensed Consolidated Balance Sheets.

Long-term debt rates currently available to us for debt with similar terms and remaining maturities are used to estimate the fair value for debt issues that are not quoted on an exchange. The estimated fair value of total debt, measured using Level 2 inputs, was ~~$913.4~~$881.2 million and ~~$954.8~~$984.9 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 14 - Restructuring

Overview

2020 Repositioning - In the second quarter of 2020, we initiated actions in response to the adverse economic impact of COVID-19 and integration actions related to the Cummins-Allison acquisition. These actions include workforce reductions of approximately 1,200 employees, or about 11% of our global workforce, and the exiting of two leased office facilities and one leased warehouse facility. We have completed this program and do not expect to incur additional restructuring charges.

2019 Repositioning - In the fourth quarter of 2019, we initiated actions to consolidate two manufacturing operations in Europe within our ~~Fluid Handling~~Process Flow Technologies segment. In 2020, we recorded additional severance costs related to the final negotiation with the works council/union at both locations. These actions, taken together, included workforce reductions of approximately 180 employees, or less than 1% of our global workforce. We expect to complete the program in the fourth quarter of 2023.

2017 Repositioning - In the fourth quarter of 2017, we initiated broad-based repositioning actions designed to improve profitability. These actions included headcount reductions of approximately 300 employees, or about 3% of our global workforce, and select facility consolidations in North America and Europe. In 2020, we adjusted the estimate downward to reflect the impact of employees that chose to voluntarily terminate prior to receiving severance at the conclusion of the actions in North America. In 2021, we recorded a gain on sale of real estate related to these actions.

~~Other Restructuring -~~ In We expect to complete the ~~second~~program in the first quarter of ~~2020, we recorded other restructuring costs within our Payment & Merchandising Technologies segment. We do not expect to incur additional restructuring charges.~~2023.

Restructuring ~~gain,~~(gains) charges, net

~~During the three-month periods ended March 31, 2021 and 2020, we~~We recorded arestructuring (gains) charges, net ~~restructuring gain of $13.1 million and $1.2 million, respectively, primarily related to the 2017 repositioning actions described above. These gains~~which are reflected in the Condensed Consolidated Statements of Operations, as ~~“Restructuring gain, net.”~~

~~Restructuring gain, net by segment are as~~ follows:

Three Months Ended March 31,
(in millions) 2021 2020
Fluid Handling 1
$ (12.6) $ 0
Payment & Merchandising Technologies (0.5) (1.2)
Total restructuring gain, net 1
$ (13.1) $ (1.2)

1 We also recorded related costs of $1.4 million and $1.3 million for the three months ended March 31, 2021 and 2020, respectively. These costs primarily relate to facility consolidations and are recorded within Cost of sales and Selling, general and administrative.

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~


	Three Months Ended March 31,
(in millions)	2022		2021

Process Flow Technologies	$	—	$	(12.6)
Payment & Merchandising Technologies	—		(0.5)
Total restructuring (gains) charges, net	$	—	$	(13.1)

The following table summarizes our restructuring ~~(gain) charges,~~gains, net by program, cost type and segment for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Three months ended March 31, 2021						Three months ended March 31, 2020							Three months ended March 31, 2022						Three months ended March 31, 2021
(in millions)	(in millions)	Severance		Other		Total		Severance		Other		Total		(in millions)	Severance		Other		Total		Severance		Other		Total

Payment & Merchandising Technologies	Payment & Merchandising Technologies	$	(0.5)	$	0	$	(0.5)	$	0	$	0	$	0	Payment & Merchandising Technologies	$	—	$	—	$	—	$	(0.5)	$	—	$	(0.5)
2020 Repositioning														2020 Repositioning	$	—	$	—	$	—	$	(0.5)	$	—	$	(0.5)

Process Flow Technologies														Process Flow Technologies	$	—	$	—	$	—	$	0.1	$	—	$	0.1
2019 Repositioning														2019 Repositioning	$	—	$	—	$	—	$	0.1	$	—	$	0.1

2020 Repositioning		$	(0.5)	$	0	$	(0.5)	$	0	$	0	$	0

Fluid Handling		$	0.1	$	0	$	0.1	$	0	$	0	$	0
2019 Repositioning		$	0.1	$	0	$	0.1	$	0	$	0	$	0

Fluid Handling 1		$	0	$	(12.7)	$	(12.7)	$	0	$	0	$	0
Payment & Merchandising Technologies 1		0		0		0		0		(1.5)		(1.5)
Process Flow Technologies 1														Process Flow Technologies 1	$	—	$	—	$	—	$	—	$	(12.7)	$	(12.7)

2017 Repositioning	2017 Repositioning	$	0	$	(12.7)	$	(12.7)	$	0	$	(1.5)	$	(1.5)	2017 Repositioning	$	—	$	—	$	—	$	—	$	(12.7)	$	(12.7)

Payment & Merchandising Technologies		$	0	$	0	$	0	$	0.3	$	0	$	0.3
Other Restructuring		$	0	$	0	$	0	$	0.3	$	0	$	0.3

Total	Total	$	(0.4)	$	(12.7)	$	(13.1)	$	0.3	$	(1.5)	$	(1.2)	Total	$	—	$	—	$	—	$	(0.4)	$	(12.7)	$	(13.1)

1 Reflects a pre-tax gain related to the sale of real estate in ~~both~~ 2021 ~~and 2020~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the cumulative restructuring costs, net incurred through March 31, ~~2021 and the remaining~~2022. We do not expect to incur additional facility consolidation costs ~~related to facility consolidations expected~~ to complete these actions as of March 31, ~~2021:~~2022.


		Cumulative Restructuring Costs, Net						Remaining Costs			Cumulative Restructuring Costs, Net
(in millions)	(in millions)	Severance		Other		Total		2021		(in millions)	Severance		Other		Total
Fluid Handling		$	3.8	$	0	$	3.8	$	0
Aerospace & Electronics										Aerospace & Electronics	$	6.5	$	—	$	6.5
Process Flow Technologies										Process Flow Technologies	3.7		—		3.7
Payment & Merchandising Technologies	Payment & Merchandising Technologies	16.1		4.6		20.7		0		Payment & Merchandising Technologies	15.8		1.8		17.6
Aerospace & Electronics		6.5		0		6.5		0
Engineered Materials		0.6		0		0.6		0
2020 Repositioning	2020 Repositioning	$	27.0	$	4.6	$	31.6	$	0	2020 Repositioning	26.0		1.8		27.8

Fluid Handling		$	16.1	$	0	$	16.1	$	2.1
Process Flow Technologies										Process Flow Technologies	16.1		—		16.1
2019 Repositioning	2019 Repositioning	$	16.1	$	0	$	16.1	$	2.1	2019 Repositioning	16.1		—		16.1

Fluid Handling		$	13.5	$	(12.7)	$	0.8	$	0
Aerospace & Electronics										Aerospace & Electronics	1.3		(1.4)		(0.1)
Process Flow Technologies										Process Flow Technologies	13.1		(12.7)		0.4
Payment & Merchandising Technologies	Payment & Merchandising Technologies	11.7		0.7		12.4		0		Payment & Merchandising Technologies	11.5		0.7		12.2
Aerospace & Electronics		1.3		(1.4)		(0.1)		0
2017 Repositioning	2017 Repositioning	$	26.5	$	(13.4)	$	13.1	$	0	2017 Repositioning	$	25.9	$	(13.4)	$	12.5

Restructuring Liability

The following table summarizes the accrual balances related to ~~these~~each restructuring ~~(gain) charges by~~ program:

(in millions) 2020 Repositioning 2019 Repositioning 2017 Repositioning Total
Severance:
Balance at December 31, 2020 (c)
$ 4.2 $ 16.0 $ 4.7 $ 24.9
Expense (a)
0 0.1 0 0.1
Adjustments (b)
(0.5) 0 0 (0.5)
Utilization (2.4) (2.6) (0.1) (5.1)
Balance at March 31, 2021 (c)
$ 1.3 $ 13.5 $ 4.6 $ 19.4


(in millions)	2019 Repositioning		2017 Repositioning		Total
Severance:
Balance at December 31, 2021 (a)	$	11.5	$	0.7	$	12.2


Utilization	(4.4)		(0.6)		(5.0)
Balance at March 31, 2022 (a)	$	7.1	$	0.1	$	7.2


~~(a)~~			~~Included within Restructuring gain, net in the Condensed Consolidated Statements of Operations~~
~~(b)~~			Included within Restructuring gain, net in the Condensed Consolidated Statements of Operations and reflects changes in estimates for increases and decreases in costs related to our restructuring programs
~~(c)~~(a)			Included within Accrued Liabilities in the Condensed Consolidated Balance Sheets

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 15- Subsequent Event

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains information about Crane Co., some of which includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical information or statements about our current condition. You can identify forward-looking statements by the use of terms such as “believes,” “contemplates,” “expects,” “may,” “could,” “should,” “would,” or “anticipates,” other similar phrases, or the negatives of these terms.

Reference herein to “Crane,” “the Company,” “we,” “us” and “our” refer to Crane Co. and its subsidiaries unless the context specifically states or implies otherwise. References to “core business” or “core sales” in this report include sales from acquired businesses starting from and after the first anniversary of the acquisition, but exclude currency effects. Amounts in the following discussion are presented in millions, except employee, share and per share data, or unless otherwise stated.

We have based the forward-looking statements relating to our operations on our current expectations, estimates and projections about us and the markets we serve. We caution you that these statements are not guarantees of future performance and involve risks and uncertainties. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. There are a number of other factors, including risks and uncertainties related to the ongoing COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those expressed or implied in the forward-looking statements. Such factors also include, among others: ~~uncertainties regarding~~changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations that may harm our business, results of operation and stock price; the ~~extent and duration~~effects of the ~~impact of the COVID-19~~ongoing coronavirus pandemic on many aspects of our business, operations and financial performance, as detailed in Part II, Item 1A of this Quarterly Report on Form 10-Q; changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices; the financial condition of our customers and suppliers; economic, social and political instability, currency fluctuation and other risks of doing business outside of the United States; competitive pressures, including the need for technology improvement, successful new product development and introduction and any inability to pass increased costs of raw materials to customers; our ability to value and successfully integrate acquisitions and to realize synergies and opportunities for growth and innovation, and to attract and retain highly qualified personnel and key management; a reduction in congressional appropriations that affect defense spending and our ability to predict the timing and award of substantial contracts in our banknote business; adverse effects on our business and the global and U.S. economies generally; information systems and technology networks failures and breaches in data security, personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information; potential exposure from numerous lawsuits for asbestos-related personal injury; our ability to source components and raw materials from suppliers, including disruptions and delays in our supply chain; demand for our products, which is variable and subject to factors beyond our control; governmental regulations and failure to comply with those regulations; fluctuations in the prices of our components and raw materials; loss of personnel or being able to hire and retain additional personnel needed to sustain and grow our business as planned; risks from environmental liabilities, costs, litigation and violations that could adversely affect our financial condition, results of operations, ascash flows and reputation; risks associated with conducting a whole, as a result of increases in asbestos claims or the cost of defending and settling such claims; adverse effects as a result of environmental remediation activities, costs, liabilities and related claims; investment performancesubstantial portion of our ~~pension plan assets~~business outside the United States; being unable to identify or complete acquisitions, or to successfully integrate the businesses we acquire, or complete dispositions, including the disposition of our Engineered Materials segment; adverse impacts from intangible asset impairment charges; potential product liability or warranty claims; being unable to successfully develop and ~~fluctuations~~introduce new products, which would limit our ability to grow and maintain our competitive position and adversely affect our financial condition, results of operations and cash flow; significant competition in ~~interest rates,~~our markets; additional tax expenses or exposures that could affect our financial condition, results of operations and cash flows; inadequate or ineffective internal controls; risks related to our holding company proposal to be voted on by our stockholders at our 2022 annual stockholder meeting, which ~~may affect~~are further described in the ~~amount~~section entitled “Risk Factors Related to the Holding Company Proposal” in the registration statement on Form S-4 (File No. 333-263119) filed by our wholly-owned subsidiary, Crane Holdings, Co.; specific risks relating to our reportable segments, including Aerospace & Electronics, Process Flow Technologies, Payment & Merchandising Technologies and ~~timing~~Engineered Materials; the ability and willingness of ~~future pension plan contributions;~~the parties to meet and/or perform their obligations under any contractual arrangements that are entered into among the parties in connection with our previously announced proposed business separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; our ability to achieve some or all the benefits that we expect to achieve from our proposed business separation; and other risks noted in reports that we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, and subsequent reports and other documents filed by us or Crane Holdings, Co. with the Securities and Exchange ~~Commission.~~Commission, including any registration statement relating to our proposed business separation. We do not undertake any obligation to update or revise any forward-looking ~~statements.~~statements to reflect any future events or circumstances.

Pending Holding Company Reorganization

On February 28, 2022, Crane Co., a Delaware corporation (“Crane Co.”), Crane Holdings, Co., a Delaware corporation and wholly-owned subsidiary of Crane Co. (“Crane Holdings”), and Crane Transaction Company, LLC, a Delaware limited liability company and wholly-owned subsidiary of Crane Holdings (“Merger Sub”), entered into an Agreement and Plan of Merger, pursuant to which Crane Co. will merge with Merger Sub, with Crane Co. surviving the merger as a wholly-owned subsidiary of Crane Holdings (the “Reorganization Merger”). The Reorganization Merger is subject to specific conditions, including approval by Crane Co.’s stockholders at its 2022 Annual Meeting of Stockholders. Following the Reorganization Merger, Crane Holdings intends for Crane Co. (which will, as of that time, be a wholly-owned subsidiary of Crane Holdings) to convert from a Delaware corporation to a Delaware limited liability company (such conversion, together with the Reorganization Merger, the “Reorganization”).

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Pending Separation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OUTLOOK - CONTINUING OPERATIONS

Overall

Our sales depend heavily on industries that are cyclical in nature or are subject to market conditions which may cause customer demand for our products to be volatile and unpredictable. Demand in these industries is affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors. As we exited 2021 and through the first quarter of 2022, we have experienced significant inflationary pressure across most businesses and have initiated pricing actions to ensure we cover the higher costs and protect our margin profile.

For ~~2021,~~2022, we expect a total year-over-year sales increase of approximately 8%3% to 4%, driven by ~~mid-single digit~~approximately 5% core growth, ~~following~~partially offset by a 1% to 2% impact from unfavorable foreign exchange. On a year-to-date basis through March, substantially all of our core growth has been driven by price to offset the ~~substantial core sales decline in 2020 attributable to the COVID-19 pandemic, an approximate 2.5% benefit from favorable foreign exchange, and a slight acquisition benefit.~~impact of inflation. We expect anhigher pricing on a full-year basis to approximately offset the impact of inflation. We expect a 1% to 2% improvement in operating profit ~~of more than 70%,~~ driven primarily by ~~a combination of~~productivity benefits and operating leverage on higher volumes, ~~restructuring~~partially offset by higher transaction related costs, primarily related to the Separation and ~~acquisition related charges recorded~~unfavorable mix.

This Outlook does not include any potential impacts from the pending Crane Supply divestiture which is expected to close in ~~2020 that will not repeat~~the second quarter of 2022. If such transaction closes in ~~2021, productivity~~2022, it would result in a decrease in sales and ~~carry-over savings associated with COVID-19 related repositioning actions.~~operating profit relative to the Outlook described here in both the Overall and Process Flow Technologies sections.

~~Fluid Handling~~Aerospace & Electronics

In ~~2021,~~2022, we expect ~~Fluid Handling~~Aerospace & Electronics core sales to increase in the high-single digit range as compared to ~~2020,~~2021, primarily driven by ~~core sales growth~~higher volumes and, to a lesser extent, price. We expect a substantial improvement in our commercial OEM business driven by higher aircraft build rates, and we expect a substantial improvement in our commercial aftermarket business given continued recovery in airline flight hours following two years of depressed demand due to the impacts of COVID-19. We expect our defense OEM business to be flat and our defense aftermarket businesses to be slightly lower given challenging comparisons to recent years where these markets exhibited very strong growth.We expect segment operating profit to increase in the low double-digit range as compared to 2021 driven primarily by the impact of operating leverage on higher volumes.

Process Flow Technologies

In 2022, we expect Process Flow Technologies sales to increase slightly driven by low- to mid-single digit ~~range following~~core growth, partially offset by a low single-digit impact from unfavorable foreign exchange. As a result of inflationary pressures, we expect additional price to supplement volume growth during the ~~substantial core sales decline in 2020 attributable to the COVID-19 pandemic; favorable foreign exchange of approximately 4%; and a small benefit from the I&S acquisition.~~year.

We expect Process Valves and Related Products sales to increase in the ~~high-single~~low- to mid-single digit range as compared to ~~2020,~~2021, driven by mid-single digit core sales growth, ~~an approximate 3% benefit~~partially offset by a low-single digit impact from ~~favorable~~unfavorable foreign ~~exchange, and a small benefit from the I&S acquisition.~~exchange. We expect Commercial Valves sales to ~~increase~~decline in the ~~low double-digit range compared to 2020 driven by favorable foreign exchange in the mid- to high-single~~mid-single digit range ~~and low- to mid-single~~with a low-single digit decline in core sales ~~growth.~~and a low-single digit impact from unfavorable foreign exchange. We expect Pumps and Systems sales to increase in the ~~mid- to~~ high-single digit range as compared to ~~2020,~~2021, driven by ~~growth in the~~strong demand across municipal and non-residential U.S. ~~municipal markets and military.~~end markets.

We expect an improvement in the segment’s operating profit as compared to 2021 in the low-single digit range, driven by strong productivity and operating ~~margin compared~~leverage on higher volumes as well as higher pricing to ~~2020, driven by the impact of higher sales volume, lower restructuring and acquisition related charges, and carry-over savings primarily associated with COVID-19 related repositioning actions.~~cover inflationary pressures.

Payment & Merchandising Technologies

In ~~2021,~~2022, we expect Payment & Merchandising Technologies sales to increase in the ~~low-double~~low- to mid-single digit range as compared to ~~2020,~~2021, driven ~~primarily~~ by ~~high-single~~mid-single digit core sales growth, ~~and an approximate 3% benefit~~partially offset by a low-single digit impact from ~~favorable~~unfavorable foreign exchange. Higher pricing is expected to offset higher inflation and sustain margins.

At Crane Payment Innovations, we expect core sales growth in the ~~high-single~~low-double digit range, driven by broad-based strength across all vertical markets, ~~following the substantial core sales decline in 2020 attributable to the COVID-19 pandemic.~~together with higher pricing. At Crane Currency, we expect core sales to ~~increase~~decline in the high-single digit range as compared to ~~2020 primarily driven by higher~~2021 due to lower expected sales to ~~the U.S. Government.~~international customers, reflecting challenging comparisons to a record year of project activity and growth in 2021.

We expect the segment’s operating profit to ~~increase substantially~~be similar as compared to ~~2020, driven by the impact from the~~2021, with higher ~~sales volume, favorable product mix,~~prices and strong productivity ~~carry-over savings primarily associated with COVID-19 related repositioning actions, and the absence of restructuring and acquisition-related costs.~~

~~Aerospace & Electronics~~

~~In 2021, we expect Aerospace & Electronics core sales~~ to decline in the mid-single digit range compared to 2020 as the COVID-19 pandemic continues to depress business and leisure air travel. Accordingly, we expect a decline in our commercial OEM business driven by lower aircraft build rates, and we expect a decline in our commercial aftermarket business given continued lower airline flight hours. We expect a decline in our defense OEM and aftermarket businesses given very challenging comparisons to 2020 where these markets exhibited very strong growth. We expect the segment’s operating profit to decrease compared to 2020 driven primarily by the impact of the lower sales volume, partiallybe approximately offset by ~~carry-over savings associated with COVID-19 related repositioning actions,~~inflationary pressures and ~~the absence of restructuring related costs.~~unfavorable sales mix.

~~Engineered Materials~~

In 2021, we expect Engineered Materials sales to increase approximately 20% compared to 2020 driven primarily by substantially stronger recreational vehicle industry build rates in response to increasing consumer preference for RV lifestyle and RV vacations, higher trailer industry build rates, and a recovery in certain building products end markets. Segment operating profit and operating margin are expected to increase compared to 2020 driven primarily by the impact of the higher sales volume.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results from Continuing Operations – Three Month Periods Ended March 31,

The following information should be read in conjunction with our condensed consolidated financial statements and related notes. All comparisons below refer to the first quarter ~~2021~~2022 versus the first quarter ~~2020,~~2021, unless otherwise specified.

First Quarter Change
(dollars in millions) 2021 2020 $ %
Net sales $ 833.5 $ 797.9 $ 35.6 4.5 %
Operating profit 146.4 88.6 57.8 65.2 %
Acquisition-related and integration charges * — 5.2 (5.2) NM
Restructuring and related (gain) charges, net * (11.7) 0.1 (11.8) NM
Operating margin 17.6 % 11.1 %
Other income (expense):
Interest income 0.4 0.4 — —
Interest expense (13.6) (12.5) (1.1) (8.8) %
Miscellaneous income, net 3.9 3.8 0.1 2.6 %
Total other expense (9.3) (8.3) (1.0) (12.0) %
Income before income taxes 137.1 80.3 56.8 70.7 %
Provision for income taxes 28.7 17.5 11.2 64.0 %
Net income attributable to common shareholders $ 108.4 $ 62.8 $ 45.6 72.6 %
* Acquisition-related and integration charges and restructuring and related (gain) charges, net are included in operating profit and operating margin.


	First Quarter						Change
(dollars in millions)	2022			2021			$		%
Net sales	$	801.1		$	779.6		$	21.5	2.8	%

Cost of sales	473.8			470.5			3.3		0.7	%
as a percentage of sales	59.1		%	60.4		%
Selling, general and administrative	193.7			182.2			11.5		6.3	%
as a percentage of sales	24.2		%	23.4		%
Restructuring gain, net	—			(13.1)			13.1		NM
Operating profit	133.6			140.0			(6.4)		(4.6)	%
Operating margin	16.7		%	18.0		%

Other income (expense):
Interest income	0.3			0.4			(0.1)		(25.0)	%
Interest expense	(11.1)			(13.6)			2.5		18.4	%
Miscellaneous income, net	3.5			3.9			(0.4)		(10.3)	%
Total other expense	(7.3)			(9.3)			2.0		21.5	%
Income from continuing operations before income taxes	126.3			130.7			(4.4)		(3.4)	%
Provision for income taxes	31.6			27.3			4.3		15.8	%


Net income from continuing operations attributable to common shareholders	$	94.7		$	103.4		$	(8.7)	(8.4)	%



Supplemental Data:

Transaction related expenses 1	6.1			—			6.1		NM
1 Amounts included within Selling, general & administrative costs.

Sales increased by ~~$35.6~~$21.5 million, or ~~4.5%~~2.8%, to ~~$833.5~~$801.1 million in ~~2021.~~2022. Net sales by destination related to operations outside the United States were ~~37.8%~~47.7% and ~~35.9%~~48.6% of total net sales for the quarters ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The year-over-year change in sales included:

•~~favorable foreign currency translation of $25.2 million, or 3.2%.~~

•an increase in core sales of ~~$5.4~~$35.5 million, or ~~0.7%;~~4.6%, which in aggregate which was primarily comprised of higher pricing; and

•unfavorable foreign currency translation of $14.0 million, or 1.8%.

Cost of sales increased by $3.3 million, or 0.7% to $473.8 million in 2022. The increase is primarily related to an increase in ~~sales~~material, labor and other manufacturing costs of $24.6 million, or 5.2%, partially offset by productivity gains of $14.8 million, or 3.1%, and favorable foreign currency translation of $8.7 million, or 1.8%.

Selling general and administrative expenses increased by $11.5 million, or 6.3%, to $193.7 million in 2022. The increase was driven primarily by an increase in selling costs of $7.8 million, or 4.3%, transaction related expenses of $6.1 million, or 3.3%, primarily related to ~~a benefit from~~ the ~~January 2020 I&S acquisition~~Separation, partially offset by favorable foreign currency translation of ~~$5.0~~$2.6 million, or ~~0.6%~~1.4%.

Operating profit ~~increased~~decreased by ~~$57.8~~$6.4 million, or ~~65.2%~~4.6%, to ~~$146.4~~$133.6 million in ~~2021.~~2022. The ~~increase~~decrease in operating profit ~~reflected higher operating profit in our Payment & Merchandising Technologies~~is related to transaction related expenses of $6.1 million, and Fluid Handling segments, partially offset by lower operating profit in our Aerospace & Electronics and Engineered Materials segments, and higher corporate costs. Operating profit in the first quarter of 2021 included a net restructuring ~~and related~~ gain of ~~$11.7~~$13.1 million ~~primarily~~ related to prior repositioning ~~actions. Operating profit~~actions which did not repeat in 2022, offset by $12.9 million of operational improvement across the ~~first quarter of 2020 included acquisition-related and integration costs of $5.2 million related to the I&S and Cummins-Allison acquisitions.~~segments.

Other expense ~~increased $1.0~~decreased $2.0 million, or ~~12.0%~~21.5%, to $7.3 million, primarily reflecting ~~higher~~lower interest expense ~~resulting from~~following the repayment of the 364-day credit facility ~~entered into~~ in April ~~2020.~~

Our effective tax rate is affected by a number of items, both recurring and discrete, including the amount of income we earn in different jurisdictions and their respective statutory tax rates, acquisitions and dispositions, changes in the valuation of our deferred tax assets and liabilities, changes in tax laws, regulations and accounting principles, the continued availability of statutory tax credits and deductions, the continued reinvestment of our overseas earnings, and examinations initiated by tax authorities around the world.

Our tax rate for the three months ended March 31, 2021 is lower than the prior year’s comparable period primarily due to higher tax credit utilization, partially offset by a lower statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

~~Our tax rate for the three months ended March 31, 2021 is approximately equal to the statutory U.S. federal tax rate of 21%.~~2021.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our effective tax rate attributable to continuing operations for the three months ended March 31, 2022 is higher than the prior year’s comparable period primarily due to higher non-U.S. taxes, partially offset by a greater benefit related to share-based compensation.

Comprehensive Income


		Three Months Ended					Three Months Ended
		March 31,					March 31,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Net income before allocation to noncontrolling interests	Net income before allocation to noncontrolling interests	$	108.4	$	62.8	Net income before allocation to noncontrolling interests	$	105.0	$	108.4
Components of other comprehensive income (loss), net of tax
Components of other comprehensive income, net of tax						Components of other comprehensive income, net of tax
Currency translation adjustment	Currency translation adjustment	(34.9)		(45.2)		Currency translation adjustment	(21.6)		(34.9)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	Changes in pension and postretirement plan assets and benefit obligation, net of tax	4.9		3.6		Changes in pension and postretirement plan assets and benefit obligation, net of tax	3.3		4.9
Other comprehensive income (loss), net of tax		(30.0)		(41.6)
Other comprehensive income, net of tax						Other comprehensive income, net of tax	(18.3)		(30.0)
Comprehensive income before allocation to noncontrolling interests	Comprehensive income before allocation to noncontrolling interests	78.4		21.2		Comprehensive income before allocation to noncontrolling interests	86.7		78.4
Less: Noncontrolling interests in comprehensive income	Less: Noncontrolling interests in comprehensive income	0.8		(0.3)		Less: Noncontrolling interests in comprehensive income	0.1		0.8
Comprehensive income attributable to common shareholders	Comprehensive income attributable to common shareholders	$	77.6	$	21.5	Comprehensive income attributable to common shareholders	$	86.6	$	77.6

For the three months ended March 31, ~~2021,~~2022, comprehensive income before allocations to noncontrolling interests was ~~$78.4~~$86.7 million compared to ~~$21.2~~$78.4 million in the same period of ~~2020.~~2021. The ~~$57.2~~$8.3 million increase was driven by ~~higher net income before allocation to noncontrolling interests of $45.6~~a $13.3 million ~~and a $10.3 million year over year~~year-over-year favorable impact of foreign currency translation adjustments, primarily related to the ~~euro~~British pound and Japanese ~~yen.~~yen, partially offset by lower net income before allocation to noncontrolling interests of $3.4 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results of Operations - Three Month Periods Ended March 31,

Aerospace & Electronics


	First Quarter						Change
(dollars in millions)	2022			2021			$		%
Net sales by product line:
Commercial Original Equipment	$	58.7		$	54.7		$	4.0	7.3	%
Military Original Equipment	57.4			62.8			(5.4)		(8.6)	%
Commercial Aftermarket Products	28.6			19.5			9.1		46.7	%
Military Aftermarket Products	12.5			17.1			(4.6)		(26.9)	%
Total net sales	$	157.2		$	154.1		$	3.1	2.0	%
Cost of sales	$	97.4		$	99.4		$	(2.0)	(2.0)	%
as a percentage of sales	62.0		%	64.5		%
Selling, general and administrative	$	31.7		$	28.7		$	3.0	10.5	%
as a percentage of sales	20.2		%	18.6		%
Operating profit	$	28.1		$	26.0		$	2.1	8.1	%

Operating margin	17.9		%	16.9		%

Supplemental Data:
Backlog	$	508.4		$	481.6		$	26.8	5.6	%

Sales increased $3.1 million, or 2.0%, to $157.2 million in 2022.

•Sales of Commercial Original Equipment increased $4.0 million, or 7.3%, to $58.7 million in 2022, reflecting higher shipments to aircraft manufacturers as the industry continues to recover from the COVID-19 related slowdown.

~~Fluid Handling~~•Sales of Military Original Equipment decreased $5.4 million, or 8.6%, to $57.4 million in 2022, primarily reflecting lower shipments due to order timing and material availability.

First Quarter Change
(dollars in millions) 2021 2020 $ %
Net sales by product line:
Process Valves and Related Products $ 174.5 $ 157.2 $ 17.3 11.0 %
Commercial Valves 89.2 75.9 13.3 17.5 %
Pumps and Systems 24.3 23.6 0.7 3.0 %
Total net sales $ 288.0 $ 256.7 $ 31.3 12.2 %
Operating profit $ 49.9 $ 28.0 $ 21.9 78.2 %
Acquisition-related and integration charges * $ — $ 2.0 $ (2.0) NM
Restructuring and related (gain) charges, net * $ (11.2) $ 1.3 $ (12.5) NM
Backlog $ 325.4 $ 293.4 $ 32.0 10.9 %
Operating margin 17.4 % 10.9 %
* Acquisition-related and integration charges and restructuring and related (gain) charges, net are included in operating profit and operating margin.
•Sales of Commercial Aftermarket Products increased $9.1 million, or 46.7%, to $28.6 million in 2022, reflecting higher demand from the airlines due to improving air traffic as the industry continues to recover from the COVID-19 related slowdown together with higher pricing.

~~Fluid Handling~~•Sales of Military Aftermarket Products decreased $4.6 million, or 26.9%, to $12.5 million in 2022, primarily reflecting lower spares sales.

Cost of sales decreased by $2.0 million, or 2.0%, to $97.4 million in 2022, primarily reflecting $5.2 million, or 5.2%, of favorable mix, $3.5 million, or 3.5%, of productivity benefits, partially offset by a $7.6 million, or 7.7%, increase in material, labor and other manufacturing costs.

Selling, general and administrative expense increased by ~~$31.3~~$3.0 million, or ~~12.2%~~10.5%, to ~~$288.0~~$31.7 million in ~~2021,~~2022, primarily reflecting an increase of $2.0 million, or 7.0%, in engineering costs and $1.0 million, or 3.5%, in selling costs.

Operating profit increased by $2.1 million, or 8.1%, to $28.1 million in 2022, primarily reflecting favorable mix of $5.2 million and productivity benefits of $3.9 million, partially offset by higher manufacturing and engineering costs of $6.0 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Process Flow Technologies


	First Quarter						Change
(dollars in millions)	2022			2021			$		%
Net sales by product line:
Process Valves and Related Products	$	182.9		$	174.5		$	8.4	4.8	%
Commercial Valves	98.2			89.2			9.0		10.1	%
Pumps and Systems	30.2			24.3			5.9		24.3	%
Total net sales	$	311.3		$	288.0		$	23.3	8.1	%

Cost of sales	$	196.8		$	190.7		$	6.1	3.2	%
as a percentage of sales	63.2		%	66.2		%
Selling, general and administrative	$	65.5		$	60.0		$	5.5	9.2	%
as a percentage of sales	21.0		%	20.8		%
Restructuring charges (gains)	$	—		$	(12.6)		$	12.6	NM
Operating profit	$	49.0		$	49.9		$	(0.9)	(1.8)	%
Operating margin	15.7		%	17.4		%

Supplemental Data:

Backlog	$	372.4		$	325.4		$	47.0	14.4	%

Sales increased by $23.3 million, or 8.1%, to $311.3 million in 2022, driven by higher core sales of ~~$14.6~~$28.1 million, or ~~5.7%~~9.8%, ~~favorable~~partially offset by unfavorable foreign currency translation of ~~$11.7~~$4.8 million, or ~~4.6%, and a benefit from the January 2020 acquisition of I&S of $5.0 million, or 1.9%~~1.7%.

•Sales of Process Valves and Related Products increased by ~~$17.3~~$8.4 million, or ~~11.0%~~4.8%, to ~~$174.5~~$182.9 million in ~~2021.~~2022. The increase reflected ~~favorable~~higher core sales of $12.3 million, or 7.0%, partially offset by unfavorable foreign currency translation of ~~$6.3~~$3.9 million, or ~~4.0%~~2.2%, primarily due to the euro ~~strengthening~~weakening against the U.S. ~~dollar, higher core sales of $6.0 million, or 3.8%, and a benefit from the acquisition of I&S of $5.0 million, or 3.2%.~~dollar. The higher core sales ~~primarily~~ reflected ~~the timing of services provided to support nuclear outages compared to the prior year.~~broad-based strength across process end markets.

•Sales of Commercial Valves increased by ~~$13.3~~$9.0 million, or ~~17.5%~~10.1%, to ~~$89.2~~$98.2 million in ~~2021,~~2022, primarily driven by a core sales increase of ~~$8.0~~$9.9 million, or ~~10.5%~~11.1%, ~~and favorable~~partially offset by unfavorable foreign currency translation of ~~$5.3~~$0.9 million, or ~~7.0%~~1.0%, as the ~~Canadian dollar and~~ British pound ~~strengthened~~weakened against the U.S. dollar. The higher core sales primarily reflected ~~higher~~improvement in demand in Canadian non-residential construction markets.

•Sales of Pumps & Systems increased by ~~$0.7~~$5.9 million, or ~~3.0%~~24.3%, to ~~$24.3~~$30.2 million in ~~2021.~~2022, reflecting broad-based improvement in demand across municipal, non-residential construction, and military end markets.

~~Fluid Handling operating profit~~Cost of sales increased by ~~$21.9~~$6.1 million, or ~~78.2%~~3.2%, to ~~$49.9~~$196.8 million, primarily related to increased volume of $9.2 million, or 4.8%, and an increase in material, labor and other manufacturing costs of $3.7 million, or 1.9%, partially offset by productivity benefits of $4.3 million, or 2.2%, and favorable foreign currency translation of $2.8 million, or 1.5%.

Selling, general and administrative expense increased by $5.5 million, or 9.2%, to $65.5 million primarily reflecting an increase of $4.1 million, or 6.8%, in selling costs and $2.6 million, or 4.3%, in administrative costs, partially offset by favorable foreign currency translation of $1.2 million, or 2.1%.

Operating profit decreased by $0.9 million, or 1.8%, to $49.0 million in ~~2021.~~ 2022. The ~~increase~~decrease reflected the impact of higher net restructuring costs of $12.6 million primarily ~~reflected~~related to the impact of a net restructuring gain on ~~the~~a sale of real estate ~~related to~~recorded in the prior ~~repositioning actions,~~year, partially offset by productivity benefits of $5.0 million, leverage on higher sales volumes of $4.8 million and restructuring savings ~~from 2020 repositioning actions and the impact~~ of ~~higher sales volumes.~~$1.9 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Payment & Merchandising Technologies


		First Quarter						Change					First Quarter						Change
(dollars in millions)	(dollars in millions)	2021			2020			$		%		(dollars in millions)	2022			2021			$		%
Net sales by product line:	Net sales by product line:											Net sales by product line:
Payment Acceptance and Dispensing Products 1		$	185.0		$	203.2		$	(18.2)	(9.0)	%
Payment Acceptance and Dispensing Products												Payment Acceptance and Dispensing Products	$	211.0		$	185.0		$	26.0	14.1	%
Banknotes and Security Products	Banknotes and Security Products	152.5			94.2			58.3		61.9	%	Banknotes and Security Products	121.6			152.5			(30.9)		(20.3)	%
Total net sales	Total net sales	$	337.5		$	297.4		$	40.1	13.5	%	Total net sales	$	332.6		$	337.5		$	(4.9)	(1.5)	%
Cost of sales												Cost of sales	$	179.1		$	180.4		$	(1.3)	(0.7)	%
as a percentage of sales												as a percentage of sales	53.8		%	53.5		%
Selling, general and administrative												Selling, general and administrative	$	69.3		$	71.7		$	(2.4)	(3.3)	%
as a percentage of sales												as a percentage of sales	20.8		%	21.2		%
Restructuring gain, net												Restructuring gain, net	$	—		$	(0.5)		$	0.5	NM
Operating profit	Operating profit	$	85.9		$	26.4		$	59.5	225.4	%	Operating profit	$	84.2		$	85.9		$	(1.7)	(2.0)	%
Acquisition-related and integration charges *		$	—		$	3.1		$	(3.1)	NM
Operating margin												Operating margin	25.3		%	25.4		%

Restructuring and related gain, net *		$	(0.5)		$	(1.2)		$	0.7	NM
Supplemental Data:												Supplemental Data:

Backlog	Backlog	$	337.0		$	326.3		$	10.7	3.3	%	Backlog	$	429.0		$	337.0		$	92.0	27.3	%
Operating margin		25.4		%	8.9		%
1 As a result of the third quarter 2020 internal merger of the CMS business into the vending vertical of the CPI business, Payment Acceptance and Dispensing Products now includes Merchandising Equipment. The prior period has been reclassified to conform to the current period presentation.
* Acquisition-related and integration charges and restructuring and related gain, net are included in operating profit and operating margin.

~~Payment & Merchandising Technologies sales increased $40.1~~Sales decreased $4.9 million, or ~~13.5%~~1.5%, to ~~$337.5~~$332.6 million in ~~2021,~~2022, driven by unfavorable foreign currency translation of $8.9 million, or 2.6%, partially offset by higher core sales of ~~$26.8~~$4.0 million, or ~~9.0%, and favorable foreign currency translation of $13.3 million, or 4.5%~~1.2%.

•Sales of Payment Acceptance and Dispensing Products ~~decreased $18.2~~increased $26.0 million, or ~~9.0%~~14.1%, to ~~$185.0~~$211.0 million in ~~2021.~~2022. The increase reflected higher core sales of $29.2 million, or 15.8%, partially offset by unfavorable foreign currency translation of $3.3 million, or 1.8%, primarily due to the Japanese yen and British pound weakening against the U.S. dollar. The core sales increase primarily reflected higher sales to gaming and retail customers and higher pricing.

•Sales of Banknotes and Security Products decreased $30.9 million, or 20.3%, to $121.6 million in 2022. The decrease reflected lower core sales of ~~$22.1~~$25.3 million, or ~~10.9%~~16.6%, ~~partially offset by favorable~~and unfavorable foreign currency translation of ~~$3.9~~$5.6 million, or ~~1.9%~~3.7%, as the ~~British pound strengthened~~euro weakened against the U.S. dollar. The core sales decrease primarily reflected lower sales to ~~vending~~international customers, ~~driven~~and to a lesser extent, lower sales to the U.S. Government.

Cost of sales decreased by ~~COVID-19 related demand impacts.~~

•~~Sales of Banknotes and Security Products increased $58.3~~$1.3 million, or ~~61.9%~~0.7%, to ~~$152.5~~$179.1 million ~~in 2021. The increase reflected higher core sales~~primarily related to productivity benefits of ~~$48.9~~$7.0 million, or ~~51.9%~~3.9%, ~~and~~ favorable foreign currency translation of ~~$9.4~~$5.8 million, or ~~10.0%~~3.2%, ~~as the euro strengthened against the U.S. dollar. The core sales increase reflected substantially higher sales to both the U.S. Government~~ and ~~international customers.~~

~~Payment & Merchandising Technologies operating profit increased by $59.5~~lower volume of $5.8 million, or ~~225.4%~~3.2%, ~~to $85.9 million~~partially offset by an increase in ~~2021. The increase primarily reflected favorable mix, productivity benefits, restructuring savings from 2020 repositioning actions~~material, labor and ~~the impact~~other manufacturing costs of ~~higher sales volumes.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Aerospace & Electronics~~

First Quarter Change
(dollars in millions) 2021 2020 $ %
Net sales by product line:
Commercial Original Equipment $ 54.7 $ 80.6 $ (25.9) (32.1) %
Military Original Equipment 62.8 60.4 2.4 4.0 %
Commercial Aftermarket Products 19.5 33.9 (14.4) (42.5) %
Military Aftermarket Products 17.1 18.0 (0.9) (5.0) %
Total net sales $ 154.1 $ 192.9 $ (38.8) (20.1) %
Operating profit $ 26.0 $ 43.8 $ (17.8) (40.6) %
Backlog $ 481.6 $ 547.5 $ (65.9) (12.0) %
Operating margin 16.9 % 22.7 %

~~Aerospace & Electronics sales decreased $38.8~~$13.3 million, or ~~20.1%~~7.3%, ~~to $154.1 million in 2021.~~

•~~Sales~~and unfavorable mix of ~~Commercial Original Equipment decreased $25.9~~$4.1 million, or ~~32.1%, to $54.7 million in 2021, primarily reflecting lower aircraft build rates as a result of COVID-19.~~2.3%.

•~~Sales of Military Original Equipment increased~~Selling, general and administrative expense decreased by $2.4 million, or ~~4.0%~~3.3%, to ~~$62.8~~$69.3 million ~~in 2021,~~primarily reflecting ~~broad-based military demand strength across solutions.~~

•~~Sales~~favorable foreign currency translation of ~~Commercial Aftermarket Products decreased $14.4~~$1.3 million, or ~~42.5%, to $19.5 million in 2021, reflecting lower sales of commercial spares as airlines reduced flight schedules in response to COVID-19.~~1.8%.

•~~Sales of Military Aftermarket Products decreased $0.9 million, or 5.0%, to $17.1 million in 2021.~~

~~Aerospace & Electronics operating~~Operating profit decreased by ~~$17.8~~$1.7 million, or ~~40.6%~~2.0%, to ~~$26.0~~$84.2 million in ~~2021,~~2022. The decrease primarily ~~as a result of~~reflected the impact of lower sales volumes, partially offset by ~~restructuring savings from 2020 repositioning actions.~~favorable pricing net of inflation and strong productivity.

~~Engineered Materials~~

First Quarter Change
(dollars in millions) 2021 2020 $ %
Net sales by product line:
FRP- Recreational Vehicles $ 24.3 $ 18.8 $ 5.5 29.3 %
FRP- Building Products 21.8 24.9 (3.1) (12.4) %
FRP- Transportation 7.8 7.2 0.6 8.3 %
Total net sales $ 53.9 $ 50.9 $ 3.0 5.9 %
Operating profit $ 6.4 $ 6.9 $ (0.5) (7.2) %
Backlog $ 17.0 $ 10.8 $ 6.2 57.4 %
Operating margin 11.8 % 13.6 %

Engineered Materials sales increased by $3.0 million, or 5.9%, to $53.9 million in 2021. The increase reflected higher sales to recreational vehicle manufacturers, partially offset by lower sales to building products customers. Engineered Materials operating profit decreased by $0.5 million, or 7.2%, to $6.4 million in 2021, primarily reflecting higher material costs, partially offset by the impact of higher sales volumes.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

Three Months Ended
March 31,
(in millions) 2021 2020
Net cash provided by (used for):
Operating activities $ 50.2 $ (35.5)
Investing activities 29.6 (177.4)
Financing activities (44.9) 134.3
Effect of foreign currency exchange rate changes on cash and cash equivalents (7.5) (12.5)
Increase (decrease) in cash and cash equivalents $ 27.4 $ (91.1)


	Three Months Ended
	March 31,
(in millions)	2022		2021
Net cash provided by (used for):
Operating activities from continuing operations	$	(49.3)	$	47.6
Investing activities from continuing operations	(12.5)		29.8
Financing activities from continuing operations	(97.8)		(44.8)
Discontinued operations	(6.7)		2.3
Effect of exchange rates on cash and cash equivalents	(5.1)		(7.5)
(Decrease) increase in cash and cash equivalents	$	(171.4)	$	27.4

Our operating philosophy is to deploy cash provided from operating activities, when appropriate, to provide value to shareholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement our portfolio, by divesting businesses that are no longer strategic or aligned with our portfolio and where such divestitures can generate capacity for strategic investments and initiatives that further optimize our portfolio, and by paying dividends and/or repurchasing shares. At any given time, and from time to time, we may be evaluating one or more of these opportunities, although we cannot assure you if or when we will consummate any such transaction.

Our current cash balance, together with cash we expect to generate from future operations along with our commercial paper program or borrowings available under our revolving credit facility is expected to be sufficient to finance our short- and long-term capital requirements, as well as to fund payments associated with our asbestos and environmental liabilities and expected pension contributions. In addition, we believe our investment grade credit ratings afford us adequate access to public and private debt markets.

In July 2021, we entered into a $650 million, 5-year Revolving Credit Agreement, which replaced the existing $550 million revolving credit facility. We also increased the size of our Commercial Paper Program (“CP Program”) to permit the issuance of short-term, unsecured commercial paper notes in an aggregate principal amount outstanding not to exceed $650 million at any time (up from $550 million, previously). Please see Note 12 for additional details.

In April 2020, to enhance financial flexibility and maintain maximum liquidity in response to the uncertainty in the global markets resulting from the COVID-19 pandemic, we entered into a senior unsecured 364-day credit facility (the “364-Day Credit Agreement”). On April 15, 2021, we repaid the amount outstanding under the 364-Day Credit ~~Agreement with cash on hand and the issuance of commercial paper.~~Agreement.

Operating Activities

Cash ~~provided by~~used for operating activities from continuing operations was ~~$50.2~~$49.3 million in the first three months of ~~2021,~~2022, compared to ~~cash used for operating activities of $35.5~~provided by $47.6 million during the same period last year. The increase in cash ~~provided by~~used for operating activities from continuing operations was primarily driven by higher ~~net income and lower~~ working capital levels reflecting higher inventory and higher bonus payments related to strong 2021 performance, partially offset by ~~higher~~lower pension contributions. Net asbestos-related payments in the first three months of 2022 and 2021 ~~and 2020~~ were ~~$10.8~~$7.5 million and ~~$11.7~~$10.8 million, respectively. In ~~2021,~~2022, we expect to make payments related to asbestos settlement and defense costs, net of related insurance recoveries, of approximately $45 million.

Investing Activities

Cash flows relating to investing activities from continuing operations consist primarily of cash used for ~~acquisitions,~~ capital ~~expenditures and cash provided by divestitures of businesses or assets.~~expenditures. Cash ~~provided by~~used for investing activities from continuing operations was ~~$29.6~~$12.5 million in the first three months of ~~2021,~~2022, compared to cash ~~used for~~provided by investing activities from continuing operations of ~~$177.4~~$29.8 million in the comparable period of ~~2020.~~2021. The increase in cash ~~provided by investing activities~~used was ~~driven by the absence~~primarily related to $20 million of ~~cash paid for the acquisition of I&S of $172.0 million,~~ net ~~cash~~ proceeds from the sale of marketable securities ~~of $20~~and $14.5 million ~~and~~of proceeds from the ~~sale~~disposition of ~~real estate related to prior repositioning actions.~~capital assets during the first three months of 2021, both of which did not repeat in the first quarter of 2022. These were partially offset by a $7.8 million increase in capital expenditures. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information systems. We expect capital expenditures of approximately ~~$75~~$60 million in ~~2021.~~2022.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financing Activities

Financing cash flows consist primarily of dividend payments to shareholders, share repurchases and repayments of indebtedness, proceeds from the issuance of long-term debt and commercial paper and proceeds from the issuance of common stock. Cash used for financing activities from continuing operations was ~~$44.9~~$97.8 million during the first three months of ~~2021,~~2022, compared to ~~cash provided by financing activities of $134.3~~$44.8 million in the comparable period of ~~2020.~~2021. The increase in cash used for financing activities from continuing operations was driven by ~~$27.1~~$175.8 million of ~~repayments of commercial paper in the first quarter of 2021 compared to $184.5~~share repurchases, partially offset by $104.0 million of net ~~proceeds received~~borrowings from the issuance of commercial ~~paper in the first quarter of 2020. This was partially offset by the absence of $70.0 million of cash used for the repurchase of shares in the first quarter of 2020.~~paper.

Recent Accounting Pronouncements

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Information regarding new accounting pronouncements is included in Note 1 to our Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the information called for by this item since the disclosure in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the information is accumulated and communicated to the Company’s Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that these controls are effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting. During the fiscal quarter ended March 31, ~~2021,~~2022, there have been no changes in the Company’s internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Part II: Other Information

Item 1. Legal Proceedings

Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note 11, “Commitments and Contingencies”, of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 1, “Legal Proceedings.”

Item 1A. Risk Factors

Information regarding risk factors appears in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable

On October 25, 2021, the Company announced that its Board of Directors authorized the Company to purchase up to $300 million of its common stock through a share repurchase program (the “Program”) that calls for shares to be purchased in the open market from time-to-time at prevailing prices in accordance with federal securities laws. All remaining shares as of March 31, 2022, were repurchased in April prior to the Program expiring on April 22, 2022.

~~We did not make any open-market share~~The following table only includes the open market repurchases of our common stock during the ~~quarter~~three months ended March 31, ~~2021.~~ 2022:


	Total number of shares purchased (a)	Average price paid per share (b)		Total number of shares purchased as part of publicly announced plans or programs	Maximum dollar value of shares that may yet be purchased under the plans or programs (in millions)
January 1-31	628,179	$	102.91	1,587,592	$	137.4
February 1-28	504,792	$	102.51	2,092,384	$	85.7
March 1-31	660,246	$	105.78	2,752,630	$	15.8
Total January 1 — March 31, 2022	1,793,217	$	103.86

(a) Shares repurchased are based on the trade date

(b) Excludes any fees, commissions or other expenses associated with share repurchases

We routinely receive shares of our common stock as payment for stock option exercises and the withholding taxes due on stock option exercises and the vesting of restricted share units from stock-based compensation program participants.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits


Exhibit 10.1						Agreement and Plan of Merger, dated as of February 28, 2022, by and among Crane Co. ~~Amended & Restated 2018 Stock Incentive Plan~~, Crane Holdings, Co. and Crane Transaction Company, LLC (incorporated by reference ~~to Exhibit 10.1~~ to the Registrant’s Current Report on Form 8-K filed ~~April 26, 2021).~~February 28, 2022)
Exhibit 31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 32.1**						Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or 15d-14(b)
Exhibit 32.2**						Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b)
101.INS						XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema (filed herewith)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed with this report

** Furnished with this report

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		CRANE CO.
		REGISTRANT

Date
May ~~5, 2021~~4, 2022	By	/s/ Max H. Mitchell
		Max H. Mitchell
		President and Chief Executive Officer

Date	By	/s/ Richard A. Maue
May ~~5, 2021~~4, 2022		Richard A. Maue
		Senior Vice President and Chief Financial Officer


Intangible Assets (dollars in millions)	Intangible Fair Value		Weighted Average Life
Trademarks/trade names	$	2.6	13
Customer relationships	49.0		14
Backlog	0.9		1
Total acquired intangible assets	$	52.5